Microsoft Corporation (MSFT) and the Death of IE

Microsoft Corporation (MSFT) is working on a new Web browser for Windows 10

by Alex Eppstein

Published on Mar 18, 2015 at 2:51 PM
Updated on Apr 20, 2015 at 5:32 PM

The death of Microsoft Corporation's (NASDAQ:MSFT) Internet Explorer (IE) is finally on the horizon, Chief Marketing Officer Chris Capossela confirmed earlier this week. Specifically, the launch of Windows 10 this summer will coincide with the release of a new browser -- currently codenamed Project Spartan.

That doesn't mean IE will be phased out immediately. While Spartan will be specifically tailored to fit Windows 10, its predecessor will be updated to accommodate users that require it for enterprise compatibility. This gradual shift from one brand to the next is a big deal, considering IE's desktop market share remains at an impressive 57.4% -- well above its closest competitor, Google Inc's (NASDAQ:GOOGL) Chrome.

Personally, I find Internet Explorer's shelf-life nothing short of remarkable. I've been online since the early '90s, and at various times, have used AOL, Netscape, Firefox, and Chrome. But almost never IE, due to its astronomical error rate. (Though, it should be noted, MSFT has improved the product dramatically in recent years.)

Shifting gears, MSFT shares have been locked in a downtrend since touching a decade-plus high of $50.04 in mid-November. Specifically, the stock has tumbled 15.5% to its current perch at $42.28.

Daily Chart of MSFT since November 2014

However, sentiment remains fairly optimistic on the Street. During the past 10 weeks across the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), MSFT has racked up a call/put volume ratio of 2.13 -- just 1 percentage point from a 52-week peak.

Likewise, 11 of 25 analysts still consider Microsoft Corporation (NASDAQ:MSFT) a "buy" or better. All things considered, a capitulation among bullish options traders and/or a round of bearish brokerage notes could pressure the shares further south.

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