"Microsoft might make some massive move to reconfigure the company via acquisition or spinoff," wrote Swisher, "Top of mind: Buying Nokia to solidify its phone efforts, as well as bringing back former Microsoft exec and current Nokia CEO Stephen Elop."
Swisher didn't report that as a fact, just sort of mentioned it. But, it did happen.
The next paragraph from Swisher said, "Microsoft could also spin parts of the company off, most especially its entertainment and games products, which is something many investors have already called for. With the recent loss of its leader, Don Mattrick, and the continued outlying status of the efforts, it’s not that much of a stretch to see them move alone or join with another company."
Again, she's not reporting it as a fact, just tossing it out there. And just because the Nokia thing came true, doesn't mean the Xbox thing will come true.
It makes plenty of sense for Microsoft to drop Xbox.
It's just not a core piece of what Microsoft does. Its not developing killer games for Windows Phone. It could help in the living room, but that's a ways away. And Microsoft would likely retain a stake in an Xbox company, so it could enjoy the upside.
The Xbox doesn't make money for Microsoft. Entertainment and Devices posted a $110 million loss last quarter. For fiscal 2013, its operating income was less than a billion. Microsoft's overall operating income was $26.7 billion.
And, importantly, hedge fund ValueAct doesn't seem to like the Xbox business.
While ValueAct has not been speaking much about its agenda, Nomura analyst Rick Sherlund has been talking about ValueAct in his reports. He seems to have a connection at ValueAct as what he's said about ValueAct has played out.
A few weeks ago, when discussing ValueAct's agenda, Sherlund said, "Xbox is cool, but by our estimates Microsoft has not made money at this. We are about to see the launch of the new Xbox One, so let’s not shut it down, but it is appropriate to add to the agenda of investments that need to be scrutinized and alternatives considered including the potential sale."
This is all speculative, but the speculation based on what well-informed sources are saying — Sherlund (who seems to be tight with ValueAct) and Swisher (who is well-sourced at Microsoft and in the tech world at large.)
We have no idea if Microsoft will actually sell the Xbox business, but it wouldn't surprise us if that's the next major move it makes.