While our base case scenario envisions pricing declines to level off due to the growth of the smartphone segment that should offset the downward pricing pressures, we assess the downside risk here in the event that the current rate of pricing declines continue into the future.
However, a closer look at segment performance revealed weak Windows revenue and profit, which were offset by stronger results in the Business Division (which sells Office) and Server and Tools (the enterprise part of the company).
Martha Stewart Living is trying to fatten merchandising revenue as it struggles to offset declines in its broadcast and publishing business, a segment that accounts for more than 60 percent of its total business.