A Microsoft (MSFT) Christmas

October 24, 2007 by Douglas A. McIntyre

Christmas may come early to Microsoft (MSFT) investors.

Just a year ago, it was hard to imagine that the world’s largest software company would ever have an earnings engine beyond its core Windows OS and Office products. They have been the huge majority of revenue and 100% of operating profit since the company began. And, they have offset losses in the company’s video game and online divisions.

Improved sales in PCs over the last quarter may help the company’s core software businesses bring in an impressive quarter, but going into the last two months of the year, the tremendous success of the company’s new video game "Halo 3" and the lift that it is giving to Xbox 360 sales, could actually turn the device business into a profit-maker for the company. Last year, the division lost $1.9 billion.

Green ink in that division along with strong Vista sales could actually turn Microsoft into a growth stock story again.

Ho, Ho, Ho.

Douglas A. McIntyre

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