Cowen & Co.’s Gregg Moskowitz this morning reiterates an Outperform rating on Microsoft (MSFT), writing that the online hosted version of the company’s Office suite, dubbed “Office 365,” is having an “impressive debut” since it went live seven months ago.
“O365 has gotten off to a strong start, even better than we had expected,” he writes.
Moskowitz projects Office 365 could generate $4 billion in “incremental bookings” for Microsoft, cumulatively, from this year through 2014, and $1.5 billion in cash from operations and 6 cents a share in additional profit.
Among the encouraging data points, Moskowitz notes that Office 365 had “over 50,000 trials in the first two weeks,” that over 20% of Fortune 500 firms have begun to take it up “in some capacity,” and that the program is prompting broader adoption by small businesses of Microsoft server products such as Exchange, SharePoint and Lync.
Moskowitz credits in part Microsoft’s “wise pricing strategy,” with monthly user licenses ranging from free for students on up to $27 a month for enterprise workers who add on features such as voice-over-Internet.
Still, challenges remain, he writes, particularly from Google’s (GOOG) online offerings:
While GOOG�s productivity software was quite raw a couple of years ago, GOOG continues to invest, and the product has clearly improved. While the vast majority of GOOG wins are small businesses, there have been occasional big deals, such as a Nov. 2011 agreement to provide email and online collaboration software to over 100k employees at General Motors (GM).
Microsoft shares today are up a penny at $30.36.
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