Foxy Deal For News Corp. Helps Drive Stock To $20

News Corp. is Glee-ful

News Corp’s 20th Century Fox Studios recently signed a deal with NCR’s Blockbuster Express to delay DVD rentals by 28 days for new releases. This follows a similar deal that NCR signed with Universal last month.

Fox studios signed similar deals with Netflix earlier this year and Sony and Time Warner have also announced similar deals with distributors. At its root, studios are trying to protect potential sales from new releases in exchange for offering content to distributors like NCR or Netflix.

For News Corp, we estimate that Fox Studios constitutes about 18% of the stock and majority of that value is derived from DVD sales.

We currently have a $19.91 price estimate for News Corp, which is about 30% ahead of the current market price.

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Rentals, Streaming Replacing DVD Sales

As a result of increased digital distribution, a shift towards rentals and streaming content and increased piracy, the global demand for DVDs has been declining. Additionally, lackluster adoption of the new Blu-Ray disc format has not offset DVD declines.

According to a research report published by the Strategy Analytics earlier this year, global DVD sales decreased by 9% in 2009 amounting to $33 billion and are expected to further decline by 12% in 2010. While global Blu-Ray sales are predicted to reach $6.50 in 2010, they are not expected to offset drop in DVD sales.

New Distribution Necessary

News Corp must find new ways of monetizing its content in view of declining DVD sales. More digital distribution deals with online platforms like Netflix, Hulu etc. as well as pay-per-view and on-demand business are likely to help.

If DVDs sold per household drop to 5 per year by the end of Trefis forecast period, our price estimate can see a downside of 5%. We did not factor in additional pricing pressure on DVDs due to reduced demand in this scenario but include the chart above for you to make your own estimates.

You can see the complete $19.91 Trefis price estimate for News Corp’s stock here.

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2010-12-03 17:36:00

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Momentum In PCs Can Drive Microsoft To $33

Ballmer's boys are back

Microsoft recently announced earnings and confirmed that the PC refresh cycle is well underway as evidenced by corporate PC sales growth of around 16% and single digit consumer PC sales growth in the latest quarter versus the same period a year ago. ^[]

Due to IT budget cuts and uncertainty regarding the economic recovery, many companies and consumers held back on spending in 2008 and 2009 leaving technology bellwethers like Microsoft, Oracle, SAP and Adobe worrying about when this spending would return.

We expect Microsoft to benefit broadly, but see two drivers in particular that will lift its share price: 1) higher netbooks and notebook sales, and 2) software licensing for companies, also known as productivity software.

Combined, we could see these segments add 12% to our current $30.67 Trefis price estimate, which is about 13% higher than current its current market price.

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Growth in Notebooks and Netbooks

The overall PC industry, including desktops, notebooks and netbooks, grew 10% overall last quarter versus the same period a year ago. Given pent up demand, Microsoft management expects sales growth to remain brisk until at least mid-2011. ^[]

We currently expect the number of notebooks and netbooks unit sales to grow from 176 million in 2009 to 328 million by the end of Trefis forecast period, at an average annual growth of around 8%. However, if notebook and netbooks sales show an average annual growth of 12%, we forecast an additional upside of around 5% to the $30.67 Trefis price estimate for Microsoft?s stock. See our chart below.

Given the trend for lower priced mobile computers and emerging market growth that tripled developed market growth, we feel that a 12% growth assumption for the netbooks and notebooks segment is reasonable.

Software Licensing a Profit Engine

Microsoft dominates the productivity software market which is focused on the corporate market and had around 95% market share in 2009. This segment showed double digit growth and includes Microsoft Office, SharePoint and Exchange ^[].

We currently expect productivity software sales to increase from around 305 million in 2010 to 415 million licenses by the end of Trefis forecast period at an average annual growth rate of 5%.

However, if this growth rate parallels PC sales growth of 10% since 1) users with newly purchased PCs will likely install Windows 7 – the latest version of the Windows OS, and 2) more users adopting Windows 7 will lead others to upgrade their systems, then new licenses could reach 600 million by the end of Trefis forecast period adding 7% to the Trefis share price estimate.

You can see the complete $30.67 Trefis Price estimate for Microsoft stock here.

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BlackBerry App Store pourrait drive RIM to $93

A former life

The Wall Street Journal recently published an article in which he mentioned that Research in motion makes its biggest push to attract developers to increase the number of requests in its .According report, RIM plans to bring new services and development tools in the coming weeks to try to restore its app store app store.

Software and applications have begun to play an important role in the mobile telephony decisions among consumers purchase points improved RIM app store can not only help RIM increased its share of mobile phone market, but also help the company improve its chances of monetization through its business apps.

Potential benefits to the RIM stock

RIM is competing in a market highly competitive smartphone with Apple iPhone and share phones on Android market more and more in the smartphone market.

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We expect that RIM will continue to gain global market of the mobile phone market share as the smartphone segment ends up the rest of the mobile telephony market.We believe that RIM will increase its market share of approximately 2.7% in 2009 to 7.8% at the end of the forecast period Trefis mobile phone.

RIM's market share may increase further if its app store wins more traction.There may be an increase of 30% for estimating Trefis $72 RIM stock price if its market share increase at a faster rate to 10 per cent by 2016, instead of the 7.8% that we currently have.

Improvement of the important app RIM shop

RIM has launched its April 2009 app store as a reaction to the Apple iPhone app store went live in July 2008.This discrepancy of close to a year gave Apple competitive advantage in the development of its activities applications much faster RIM.Magasin RIM app has been criticized for less developer friendly and bearing on a method of payment more tedious to other app stores.RIM has approximately 10,000 applications in the app store, much less than 70,000 Google has for its Android platform and 250,000 present in the Apple app store.

In August 2010, RIM has acquired Cellmania to better monetize its enterprise apps and compete effectively with the platform Apple advertising iAd.Apple enjoys not only by getting a cut of 30 per cent for each paid application, but also by obtaining a reduction of 40% of advertising dollars for an application libre.Le downloads app have increased rapidly for Apple, and we expect to increase rapidly in 2009 to 6.6 billion by 2010 and then to 52 billion at the end of the forecast period Trefis $ 2.2 billion.

RIM to concentrate on improving its app store can help the company increase its market share of mobile phone and offers developers a better platform to monetize their applications.

You can see the full $72 Trefis Price estimate of RIM stock here.

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