Firm Asks Microsoft to Stop Dragging Xbox Down

Tom Goldman

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Aug 17, 2009
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Firm Asks Microsoft to Stop Dragging Xbox Down



With the Xbox division projected to earn big profits in the near future, investors are recommending it make a clean break from Microsoft.

Microsoft is a giant multinational corporation made up of various divisions that each develop different products in the areas of software and electronics, with the Entertainment and Devices division bringing us merchandise like the Kinect [http://www.amazon.com/Xbox-360-250GB-Console/dp/B003O6JJKY/ref=sr_1_1?ie=UTF8&qid=1286299957&sr=8-1]. Due to the strength of the Xbox console, analysts are actually recommending that the Entertainment and Devices division be separated from the rest of Microsoft so it can reach its full potential.

Whether Kinect will be red ring of death [http://www.escapistmagazine.com/news/view/103571-Kinect-Will-Be-the-Biggest-Platform-Launch-Ever-Says-Microsoft] is largely a thing of the past, there seems to only be room for more profit, especially if Kinect is a success. However, "corporate overhead" is said to "remain the biggest challenge" for the Xbox division.

To remedy this, investment firm Goldman Sachs has recommended that Microsoft "carve off" its Xbox business. A recent Goldman Sachs report reads: "For example, the Xbox products could be an appealing stand-alone entity, given the historical success of the Xbox and the products' brand strength, and the business could show unlocked value with forced cost discipline compared to as a piece of Microsoft." The firm seems to think that a split would help Microsoft tighten its focus.

Despite the impending launch of Kinect in November, for which three million sales are predicted by the holiday season's end (by Microsoft [http://www.escapistmagazine.com/news/view/103519-Microsoft-Predicts-3-Million-Kinect-Sales-Over-the-Holidays]), Goldman has lowered their recommendation in Microsoft stock from "buy" to "neutral" due to threats from products like the iPad and services like cloud computing. As far as I can tell, a separate Xbox business would mostly be an easier way to determine if Microsoft's various new portions were worth investment or not, and wouldn't necessarily affect consumers.

Source: Gamasutra [http://www.gamasutra.com/view/news/30779/Goldman_Sachs_Recommends_Microsoft_Split_Off_Xbox_Business.php]

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Jul 22, 2009
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Maybe... maybe... Microsoft has it's good and bad points and a split off is a huge thing to do with something like the Xbox and Microsoft.

We shall see.
 

Danallighieri

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Jun 3, 2010
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It'd be a interesting thing to see if it did happen, but I doubt microsoft would ever do something such as that
 

XT inc

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Jul 29, 2009
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I dunno maybe they should if it would allow the developers to work better I.e valve no getting to release content because microsoft wants to jerk them and consumers around.
 

TsunamiWombat

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Sep 6, 2008
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Hey guys, this part of your company is making a shit ton of money, you should cut them loose so THEY (and we) can make MORE money! It'll make you feel good about yourself!
 

vallorn

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Nov 18, 2009
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Giest4life said:
Yeah, I don't think Goldmansachs shouldn't do the talking......
they have a lot of experience with this stuff.
 

Azhrarn-101

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Jul 15, 2008
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psrdirector said:
No way this would happen, this would just allow goldman more flexability in manipulating stock prices. Goldman sachs is an evil company so I take anything they say as evil advice.
While you're most likely right, those suits up top tend to trust the demons who work at Goldman, so depending on how greedy the shareholders are, this may well happen. Don't forget that short-term gain is all these people care about, not long term profits.
 

Rathands

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Oct 4, 2010
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If they break away from Microsoft, can I still justify screaming 'F*** Bill Gates' when the console breaks again?
 

VulakAerr

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Mar 31, 2010
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"What the fuck?", is all I have to say. Do they not read industry blogs or MS news? It has been stated quite plainly by Microsoft that they view their hardware division highly and want to share tech between Windows and Xbox. Kinect WILL be coming for Windows. I'd LOVE to see it coming for Windows. The potential for Kinect interfaces on the desktop PC or for presentations are mammoth. Separation makes absolutely no sense unless all you care about is stock price. Obviously, they do. Fuck them and their empty soulless ways.

Also, zero points whatsoever for spotting the troll at the top of the thread.
 

Anton P. Nym

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Tom Goldman said:
As far as I can tell, a separate Xbox business would mostly be an easier way to determine if Microsoft's various new portions were worth investment or not, and wouldn't necessarily affect consumers.
As far as I can tell, this is the Vampire Squid looking for another place to shove its blood funnel into. I don't see how this actually benefits MSFT at all; they don't need the cash that'd come from a sell-off or spin-off, as they're still sitting on a mountain of cash reserves, but could use the revenues now that Entertainment Division is finally in the black.

I'm not even certain it's in the best interests of the Xbox platform, given its huge start-up debt and sustained operating losses until (finally!) turning profits steadily last year IIRC.

However, if there is a spinoff then Goldman Sachs has another shiny new toy its brokers can hawk to their customers.

(Me, bitter? Nah.)

-- Steve
 

TLatshaw

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Aug 30, 2010
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It just seems like to much corporate work for too little gain. If people have been tying the Xbox to Microsoft and still riding with them through the RROD era after all this time, I don't think "carving off" would matter much to anyone.
 

Tom Goldman

Crying on the inside.
Aug 17, 2009
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Anton P. Nym said:
Tom Goldman said:
As far as I can tell, a separate Xbox business would mostly be an easier way to determine if Microsoft's various new portions were worth investment or not, and wouldn't necessarily affect consumers.
As far as I can tell, this is the Vampire Squid looking for another place to shove its blood funnel into.

-- Steve
Well, sure, but I can't exactly say it like that.
 

AzrealMaximillion

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Jan 20, 2010
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This would never work unless they could pull Microsoft Game Studios could pull away from Microsoft as well, which will never happen as long as MS owns the rights to Halo.