NEW YORK (TheStreet) -- Is it a viable plan for Microsoft (MSFT) - Get Microsoft Corporation Report to spinoff the Xbox division via an IPO? TheStreet's Debra Borchardt and Chris Ciaccia explore the idea.
While Xbox brought in $7 billion last year, that's down from $8 billion in 2011. However, a new console should revitalize sales, according to Ciaccia.
While hardware companies tend to trade with lower valuations, an IPO could unlock value for the Xbox division, while allowing Microsoft's stock to trade with a higher multiple -- since software companies tend to have higher valuations.
However, Ciaccia went on to say that if the next CEO was promoted from within Microsoft, an IPO would seem unlikely.
There's a small window for such an event to occur. He said the economic data has not been very good as of late, making it appear as though consumer spending might be a little light this holiday season.
Not helping matters is
upcoming Playstation 4, which will cost $100 less than the Xbox One.
Ciaccia added that if the IPO were to happen -- which he doesn't expect -- the company would want to do it with good publicity, and positive remarks, something that has so far, evaded the new product.
Bret Kenwell currently writes, blogs and also contributes to Robert Weinstein's Weekly Options Newsletter. Focuses on short-to-intermediate-term trading opportunities that can be exposed via options. He prefers to use debit trades on momentum setups and credit trades on support/resistance setups. He also focuses on building long-term wealth by searching for consistent, quality dividend paying companies and long-term growth companies. He considers himself the surfer, not the wave, in relation to the market and himself. He has no allegiance to either the bull side or the bear side.