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Another one-time Microsoft insider urges company to ditch Bing, Xbox

November 6th, 2013 at 5:15 PM
Microsoft Turnaround Advice Ditch Bing Xbox

Microsoft cofounder Paul Allen isn’t the only longtime Microsoft associate who wants the company to dump Bing and the Xbox. Barron’s has flagged some more interesting details of a research note published Wednesday by Normura analyst Rick Sherlund, whom The New York Times once described as Goldman Sachs’ “point person” for its dealings with Microsoft and who is also a longtime friend of Bill Gates. What makes the note particularly interesting is that Sherlund’s advice largely mirrors that of Paul Ghaffari, the man who heads up Allen’s private investment vehicle: He wants Microsoft to get out of its unprofitable search and gaming businesses.

“We estimate Microsoft has lost $17 billion with Bing over the past 10 years,” Sherlund explains. “It may be concerning to watch Google give away its Android operating system… but this is a superior business model… it is not important that Microsoft receive $5 or $10 billion for Bing … but rather that it eliminate about 20 cents per share in annual losses.”

The $17 billion loss, if accurate, is a truly stunning figure that dwarfs earlier estimates that showed Microsoft losing “only” $11 billion trying to compete with Google in the search market over the last decade.

Sherlund is bullish on Microsoft’s longterm potential as long as it cuts loose its money-losing businesses in the coming years and as long as it appoints Ford CEO Alan Mulally as its next chief executive.

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