Here we go again. Every year or so, a Wall Street analyst opines that the Xbox business doesn’t make sense for Microsoft and it should divest it.

Here’s the latest installment from analyst Rick Sherlund, courtesy of Geekwire:

“Xbox is one of the areas of success for Microsoft and is cool to consumers, but it is perhaps time to assess whether this can ever be material to the overall company and might be more leveragable to a consumer-oriented company such as Samsung. Perhaps they would be willing to pay several billion dollars for this to leverage their substantial consumer electronics business? Shareholders might want to know if they could possibly be better off if Xbox were spun out as a separate company or sold. Either way, it is not that material to the overall valuation of Microsoft and will not likely determine the success of Microsoft going forward; it’s just not profitable enough to move the needle that much at the company.”

I understand equity analysts really only care about a shareholder’s return on investment, and they’re mainly focused on short-term quarter-to-quarter returns at that. What they don’t care much for or give much thought to is long-term corporate strategy and how a division can bring value to a company both strategically and from a consumer-brand perspective.

But let’s put all of that aside and break down Sherlund’s analysis a bit. First off, there’s this sentence: “Xbox is one of the areas of success for Microsoft and is cool to consumers, but it is perhaps time to assess whether this can ever be material to the overall company and might be more leveragable to a consumer-oriented company such as Samsung.”

This sentence assumes that Microsoft is not a consumer-oriented company. It also makes me think Sherlund doesn’t understand today’s computing market. Here’s the thing: Technology, and personal computing in general, is mainly being driven by the consumer. Oh sure, tablets and mobile phones are a key to the business market, but let’s be honest: Being an enterprise only-business makes you well, RIM Blackberry, doesn’t it, and I don’t think that’s a particularly winning strategy.

Then there’s this: “Shareholders might want to know if they could possibly be better off if Xbox were spun out as a separate company or sold.“

They might be curious if Xbox was indeed draining resources or talent away from development of other key business units, but I don’t think it is in a significant way that’s hampering the company. I’d actually argue the Xbox group is one reason some have probably stuck it out at Microsoft over the past few years. And sure, the company has probably invested a few billion dollars in technology development for the new generation, but I’d argue that’s nothing given the potential strategic and market opportunity for the Xbox group, which is easily in the tens of billions of dollars.

Finally: “Either way, it is not that material to the overall valuation of Microsoft and will not likely determine the success of Microsoft going forward; it’s just not profitable enough to move the needle that much at the company.”

Here’s the shortsightedness money quote. With the Xbox One, Microsoft has a huge opportunity as we see the TV business reinvent itself over the next decade. It could be argued that Microsoft is leading that reinvention (as much as any other company), and to get out of the business now — in the second or third inning — is the baseball equivalent of forfeiting the game with Felix Hernandez* on the mound and a five-run lead.

*Forgive me, I’m a Mariner fan – insert your favorite ace pitcher here.