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Hopes for Microsoft Corp

By Edited May 27, 2015 0 0

Mark Mowrey, Senior Vice President for Investment Strategy at Al Frank Asset Management, feels that Microsoft has all the main traits to make it a desirable stock to buy for his company. He stated Microsoft has enticing growth prospects, extremely large capitalization, near-high levels of profitability for its industry, and absolutely broad diversification. [1]

Mark Mowrey believes the increase in Microsoft's quarterly dividend by 23 percent (from 13 cents to 16 cents) on September 21, 2010 can only be seen a good thing since it involves giving money to shareholders. He also has an opinion regarding Microsoft might has lost its creativity ingenuity that is evidenced by the dividend increase. He said the enlargement of it has a purpose, and it is still has eminent desires to invest in growth. At least the tech titan is still trying to perk up its stock price even after making some mistakes. He sees the gaming industry giving Microsoft a source of innovation and assistance with its financial performance. He continues to view Microsoft stock is worth buying even though it is not popular on Wall Street. He patience with Microsoft still hasn't paid off, but he rather invests his money on the corporation because it is stable with strong, long-term-attractive products. He sees the quarterly dividend that is moderately attractive as a reward for being patient. Moreover, he rather spend money on value stocks rather than on growth stocks because it is less expensive. Thus, growth stocks will more likely lead to failures to earn bountiful profits. [1]

Windows OS on Computer Tablets

Right now Microsoft Corp is working on building a unique Windows operating system for devices such as tablets. It has plans to show a version of its technology that could for the first time run on processors designed by UK-based ARM Holdings PLC, which has models that dominate the tablet and handheld device market. ARM chip architecture competes with the "x86" designs that is partial by Intel. [2]

Microsoft could gain some momentum for its revenues to increase by having the partnership with ARM and competing in the tablets and other battery-powered mobile devices markets. It is not known when the operating system will be available in the market. [2]

Windows Phone 7

On December 21, 2010, Microsoft stated that their expectations for the sales of the cellphones carrying Windows Phone 7 operating software has been met. Over 1.5 million have been sold during the first six weeks of its launch. The sales numbers were revealed by the vice president of business and marketing for Windows phones, Achim Berg. The OS may be the tech titan's last chance to set up an important rank in the popular cellphone market. Apple (AAPL) and Google (GOOG) are the two companies now dominating that market. [2]

Achim Berg stated Microsoft is on the move to start releasing the first of several updates in the next couple of months. He is aware the corporation will be competing on multiple areas, and that its competition in the industry is very fierce. In 2011, there will be several more mobile operators around the globe that will have Windows Phone 7 on their network. [2]

Colin Gillis, an analyst with BGC Partners, states the sales number of the cellphones with Windows Phone 7 installed are decent. He has a "buy" rating on Microsoft. He also noted that the shipment of 1.5 million phones was actually going to a destination that is not into customers' hands. It was aiming towards the distribution channel. [2]

Colin Gillis predicts about 25 million Phone 7 will be sold in 2011. That is in contrast to other analysts estimating Apple to sell more than 60 million iPhones during the same year. The vendors who have launched or plan to begin selling Phone 7-based devices are Dell Inc, Taiwan's HTC, LG Electronics, and Samsung Electronics. [2]

More Information on Microsoft

Colin Gillis has said that Microsoft is still a cash flow machine. People are purchasing approximately $10 billion worth of Windows and Office on a recent quarter. In one year, Windows 7 has sold a record-breaking 240 million copies, and Office Suite 2010 has a strong start. The twin behemoths of Windows and Office units account for more than 60% of sales and more than 80 percent of profit (excluding non-operating losses). [3]

The weakest product that Microsoft has is its online services division. The Bing search engine and the MSN portal is part of it reported a loss of 17% wider loss of $560 million in the most recent quarter (3rd quarter in 2010). The unit has now lost $6 billion in the last five years despite having control over Yahoo Web searches and investing heavily to be on par with search advertising leader Google. [3]

Colin Gillis is able to foresee Microsoft to see market gains if they use some of the $500 million to market the Windows 7 smartphone to subsidize the devices so consumers won't have to pay for them. [2]

Many of Microsoft's problems are Steve Ballmer's fault. It is always late to the market with its product offerings. For example, Zune music player came to the market place after the iPod did. Four generations of iPhones have already been produced before Windows Phone 7 finally made its way to the market. Now people will see Windows tablet PC comes out after Apple's iPads are already in customers' hands. Therefore, while Ballmer holds the CEO position, Microsoft keeps on following Apple into the technology market place. [4]

Steve Ballmer is not a tech guy. It may or may not be a good idea to have such a person as CEO of Microsoft. Mike Lazaridis of Research in Motion (RIMM), maker of Blackberry smartphones, is considered one of the world's best CEO. As a tech guy, he helped create Blackberry and produced salient returns to shareholders over the past decade. [4]

It may be a great idea for Microsoft to buy Research in Motion so they can have Mike Lazaridis as an employee. However, he probably won't accept any position that is in the lower hierarchy of CEO. With his accomplishments in forming Blackberry as a popular item, he would be a terrific choice to pick as someone to replace Ballmer and be in charge of Windows Phone 7. [4]

Final Thoughts

It is obvious Microsoft needs to take action to maintain the confidence of shareholders. The stock has been undervalued for over a decade. The major problem is that most people would rather invest in Apple at about $300 per share rather than zigzagging at $24 for Microsoft shares.


[1] http://moneywatch.bnet.com/investing/blog/against-grain/microsoft-hikes-dividend-23-but-stock-remains-unfairly-unloved/724/
[2] http://finance.yahoo.com/news/Microsoft-said-to-plan-new-rb-3380695565.html?x=0&sec=topStories&pos=2&asset=&ccode=
[3] http://www.tradearabia.com/news/INTBIZ_188179.html
[4] http://seekingalpha.com/article/228902-why-microsoft-should-buy-research-in-motion



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