Microsoft Corp (NASDAQ:MSFT)

Their day has come and gone. Google CEO Eric Schmidt describes a "gang of four" companies who are leading technological innovation on the Internet. And guess what? Microsoft is not in the gang of four (it's Google, Apple, Amazon, and Facebook). Microsoft is the grandma of the technology industry. Everyone always knew that their products were junk and it's finally caught up to them. Their latest blunder was to overpay for Skype. Skype is a good company but a company struggling to innovate and using its cash hoard to try to buy its way into modernity is not a winning formula. Microsoft has partnered with the likes of Yahoo, Nokia, etc. It's like a panoply of tech industry has-beens.

Microsoft is a monster and will be around for a long time to come, but I would not pick them to outperform in the years ahead.

yes

Microsoft is a well managed innovative company and the price is right for investors. I trust MSFT that the ROI on their R&D dollars will lead to steady growth over the next few years.

Microsoft has been one of those companies that seems just one step beind in the current trends. With all the new hot markets being cell phones, tablets, etc. and none of them running on the microsoft platform it seems that Microsoft could follow Cisco into the dumps. I don't believe we have seen the end for this great company however. This stock is currently very underpriced from lack of new market contol but maintains so much cash that buying into this stock can either see that cash in increasing dividend payouts of new products that can turn this company back into number 1 in the industry. With a P/E of 11.83 and a ROIC of almost 40, "Whats a Portfolio without it?"

Low P/E ratio

Large cash hoard

Even with rising popularity of Apple, a lot of companies use Windows and Office.. majority of world don't want to pay the premium for Macs which leaves a huge market for Microsoft

Microsoft is on the way to becoming obsolete over the next few years. Other companies are offering office software that is just as good as Microsoft Office. And Google Chrome is now going to replace the Windows operating system.

Great company but it will loose market share slowly as competitors replace PCs with tablets.

It's office products will loose to free alternatives which are better and better everyday.

Mobilephones will be growth area now when MS won Nokia deal and propably will get more vedors to seriously offer Windows phones.

Low PE, though I think there is risk from competition in the cloud.

Very cheap. Still making a lot of money in spite of mis-steps. Buying back a lot of shares. Growing dividend. With plenty of cash flow still flowing who knows how big the dividend could get over the years.

Skype might have seemed like a weird move, and maybe it was overpriced, but if you look at some of Microsoft's other areas it becomes more interesting. The Windows 8 preview released recently shows that they are well aware of the force of mobile technology right now. Windows Phone 7 is out, and it's good. There are rumors of them buying Nokia. It's feasible that Microsoft could buy a mobile carrier as well, giving them complete control of a mobile platform - hardware, operating system, protocol and a carrier that's actually competitive.

Mundane leadership in a dynamic industry, often notoriously faulty products, huge cash reserves, unpreductable product success, over-valued purchase of Skype.

David Einhorn finally said out loud what everyone knows. Balmer has to go. With Einhorn working on making this happen and putting his money where his mouth is, investors may start to get interested.

The days of running around the stage a company meetings screaming and trying to get everyone fired up are over. Employees can't get excited about their strategy of copying other great innovator's ideas, taking years to do it, doing it poorly, and spending 10x the money to do it. Investors can't get excited either.

Here is what investors would get excited about:

Spin off Xbox/kinnect into separate company with an IPO.
Give up on phones, you lost, pocket the savings
Give up on ipad imitations/windows for tablets, you lost. Pocket the savings.
Give up on search, they are just copying googles results anyway and they can't figure out how to make money selling ads (Copy adwords)
Stop the Skype deal before another 8 billion is vaporized.
Layoff tons of workers, the innovative companies will hire them.
Spend some of the money to continue patching holes in windows so the customer base erodes more slowly.
Keep releasing new office versions, but don't change anything besides the packaging. Office works fine, no one likes the changes anyway.
Do the same as above with windows but do it less often.
Continue with the cloud efforts but don't spend any money on it.
Cut R&D from 9 billion a year to about 1 billion. (About what apple spends)
Cut the advertising to the bone.
Sell empty buildings in Redmond to Amazon

After doing all of the above, take the massively increased cash flow of about $25 billion and return it to the shareholders in the form of a 8 to 12% dividend. This would send the stock to over 50 in short order.

Everyone knows this is what needs to be done, Gates knows it, and Einhorn certainly does. Maybe he has the juice to get it done.

Stock on an EV/EBIT basis is nearly as cheap as it was in the midst of the 2009 crash. MSFT's moat is enormous. Were Buffett and and Bill Gates not best buds, Berkshire would most likely own it. The cloud transformation is a risk, but MSFT is priced as though it's business model is in decay.

There are very serious questions about management. For $8.5 billion, Microsoft should have been able to build a Skype clone, buy 10 million users, and return $7.5 billion to shareholders. But they didn't. They spent the whole wad on acquiring Skype. Why couldn't that be in-housed? (Why couldn't the Kin succeed, or the Zune?)

Now Ballmer comes out talking about Windows 8, and the corporate office has to remind him the next day that it's not announced yet and they still have a Windows 7 product cycle to get through first. How much damage did this do to revenues, due to late adopters who now are just going to hold on for another 12-18 months?

More importantly - how does Ballmer make an error like that? Maybe he doesn't *know* what his company's flagship product is, or what the timeline of its next rollout is? Well, that's OK - he's just the CEO?

Seriously? This ship is adrift without a rudder. Paul Allen's owning sports teams and buying famous guitars, Bill Gates is traveling the world giving money away, and Ballmer is back to what he knows best - selling widgets, like vacuum cleaners or used cars. That's not what MSFT needs to dominate in 2012.

Microsoft, being stagnant for years, has been workign on SaaS and PaaS long before they were common acronyms. Azure's excellent development tools is making there cloud computing platform, still in it's infancy, easy to understand for people who use the industry dominating development suite. Between Azure, Windows Phone 7, (The underdog, however, not to be underestimated) and the sheer amount of money Microsoft has in the bank, tells me that restructuring is the only thing that is holding them back. Competition breeds innovation, and I believe Microsoft's complacency is disappearing.

The Apple zeitgeist is making the once-omnipresent tech giant into a value play. Sharepoint gives MSFT another hook into enterprise infrastructure.

Everyone hates Microsoft, but they have a low P/E of 9.73 and a decent dividend of .64. I also believe that Microsoft isn't going anywhere and will be around 30 plus years from now when I retire. This is a pretty good entry point to purchase this stock.

It's time.

http://www.tomsguide.com/us/Skype-Bill-Gates-VoIP-IM-Windows-Phone,news-11232.html

Apparently Bill Gates pushed for the Skype deal, and thinks its a savvy, strategic move for MSFT. I know shareholders are irritated because that could have been a huge one-time dividend payout, but maybe its better to have Bill Gates invest in what he thinks is best...