Microsoft is the
world’s largest independent developer and seller of computer software products
for a wide range of computing devices. The company has earned between 30-40%
return on equity over the last 10 years and has grown its earnings and
dividends at a 14% pace over the last five years. MSFT
was impacted by the recent economic down turn, but is returning to above
average earnings growth as a result of:
(1) its dominant
position in the PC market,
(2) expansion
into the mobile space,
(3) Microsoft is
taking market share in the server business and is profiting from the enterprise
refresh cycle,
(4) the Xbox is
growing at an above average pace,
(5) the company
recently introduced the Windows Phone 7 and has an agreement with Nokia which offers a huge opportunity,
(6)
acquisitions,
(7) the Bing
search engine is taking market share.
Negatives:
(1) softness in
the core computing market,
(2) intense
competition along with lagging sales in the mobile computing market.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2002
Debt/ EPS Down Net Value Line
Equity ROE Since 2002 Margin Rating
* the vast majority of companies
in MSFT industry do not pay a dividend
Chart
Note:
MSFT stock made good initial progress off
its March 2009 low, quickly surpassing the downtrend off its December 2007 high
(red line) and its November 2008 trading high (green line). Both long and intermediate term, MSFT
is in a trading range. The straight blue line is the lower boundary of both;
the upper boundaries are at higher levels than depicted in the chart. The wiggly blue line is on balance volume. The Aggressive Growth Portfolio owns a 50%
position in MSFT (having made a trading sale
at $30). The upper boundary of its Buy
Value Range Sell
Half Range
12/12
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