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Microsoft Stock

By Edited Oct 6, 2016 1 0

Microsoft (MSFT) is the leading manufacturer of computer software. Its Windows operating systems run on more than 90% of all personal computers throughout the world, which is the main reason for it to dominate in desktop computer operating systems. Also, the company's server software products are used in 70% of all computer server systems. Due to the continuous new versions of Microsoft Suite, it still has the control in office productivity products. [1]

CEO Steve Ballmer Selling Some Shares

In November 2010, Steve Ballmer, CEO for Microsoft Corp., sold about $1.3 billion worth of his company shares. Last time he sold some shares was back in 2003. He said his action were done to diversify his investments and to aid his year-end tax planning. He also mentioned he has plans to sell more shares by the end of the year 2010 (up to 75 million shares). Ballmer notified Securities and Exchange Commission of his transaction and it shows he sold about 50 million shares. [2]

Microsoft backed up Ballmer for selling one-eighth of his shares by issuing a statement to avoid having any negative perceptions about the company. He is actually exuberant about the new products since they have the potential to evolve people's lives by establishing advanced technology. He also wants to be part of Microsoft's success. [2]

The Street.com created a poll and asked Microsoft shareholders if they should also be selling their Microsoft shares since Ballmer and Gates have done so. The results of the poll show that about 27% of the respondents said they would sell the tech stock since there is lack of growth. Meanwhile, 11% of poll takers felt Ballmer's large year-end 2010 insider selling made it a good reason to sell shares. Another 11% responded said Ballmer's action is a concern, but wasn't a viable reason to sell shares of Microsoft. Six percent of poll respondents were bothered by Gates' annual insider selling to fund his non-profit organization. In contrast, about 45% responded said they are keeping their Microsoft shares even though there is barely any share value growth. They are also willing to keep their shares intact indifferent of recent insider selling. [3]

Share Price

Microsoft shareholders are discontent over the lack of growth that their shares have endured. From November 2007 to November 2010, Microsoft shares have traded as low as $21and as high as $37. Year-to-date, they have traded as low as $23 and as high as $31. While the shares have straggled, Apple (APPL) has its stock price at $90 this year. Nevertheless, there is hope for Microsoft stock to show improvement. [4]

Microsoft Stores

For 2011, Microsoft is trying to develop a retail storefront profile for electronic gadgets like its Kinect camera, Windows Phones, and Zune music player. The tech giant opened its seventh retail store in November or December 2010. It is located in Bellevue, Washington; first store in its neighborhood. The Wall Street Journal has a feeling it is quite similar to the retail success story to the Apple Store. Four doors away from the Bellevue, WA location of the Microsoft store is one for Apple, which currently has more than 300 locations. [4]

The new Microsoft store apparently copied an idea from Apple's playbook for retail store design by having long tables showcasing an organized arrangement of technology gadgets. Bill Gates has previously filched the Apple playbook. It is transparent that Microsoft is making an effort to jaunty up its aging product lines by giving away free tickets to a Miley Cyrus concert during the fanfare for the opening of the store. Using Miley Cyrus' celebrity status to just get her fans flock to the opening of the store may not be as wise as using her for supplemental marketing in the medium- or long-term. [4]

Raising Dividend

Despite raising its quarterly dividend by 23 percent (from 13 cents to 16 cents) on September 21, 2010, Microsoft still have trouble pleasing its shareholders. Some people felt the public wasn't satisfied that the increase wasn't higher. It seems to be a bit boorish for a hike that places the yield at 2.6 percent. That is what to 10-year Treasury bond approximately yields. [5]

The disagreeable response isn't definitely just about money. Microsoft has plenty of cash, about $37 billion, on its books. It is worth more than $4 a share. The corporation also announced at the same time that it has the authorization to take on additional $6 billion of debt. Of course the loan can be obtained with very low rates. Some investors fell like the dividend increase shows that Microsoft doesn't have any good ideas to lift up its stock price. They rather have the money be spent on another company. [5]

By looking at measures such as operating margin, return on assets, and return on equity, one can see that Microsoft (MSFT) still makes abundance of money. On all the criteria, it is better than Apple (AAPL) and Google (GOOG), and the Windows and Office software has continued been selling at an amazing speed. [5]

Microsoft has been able to have its earnings grow at an 11% rate and its stock price is right in accordance with its future earnings growth. Yet, the stock has not been able to increase; it is down 12% over the past decade. [6]

It may be a keen idea for Microsoft to acquire Research in Motion (RIMM), maker of Blackberry phones. It apparently doesn't have a chance to gain a large market share in the consumer end of the smartphone business by itself. It may have a viable opportunity to gain a significant market share and be able to compete with Apple (AAPL) and Google (GOOG). Both of those companies are already dominating the smartphone industry [6]

Mutual Funds With Shares of Microsoft.

If you want to buy shares of a mutual fund that has Google stocks as part in its portfolio, then take a look at the list of the top mutual fund holders. [7]

1. American Funds' Growth Fund of America, Inc. has about 135.25 million shares of Microsoft stocks, which comprises of 1.58% of its portfolio.
Reported on September 30, 2010

2. American Funds' Investment Company of America has about 88.3 million shares of Microsoft stocks, which comprises of 1.03% of its portfolio.
Reported on September 30, 2010

3. Vanguard's Total Stock Market Index Fund has about 85.1 million shares of Microsoft stocks, which comprises of 0.99% of its portfolio.
Reported on September 30, 2010

4. Capital World's Growth and Income Fund has about 70.5 million shares of Microsoft stocks, which comprises of 0.82% of its portfolio.
Reported on September 30, 2010

5. Vanguard's 500 Index Fund has about 69.25 million shares of Microsoft stocks, which comprises of 0.81% of its portfolio.
Reported on September 30, 2010

6. SPDR's S&P 500 ETF Trust has about 57.6 million shares of Microsoft stocks, which comprises of 0.67% of its portfolio.
Reported on September 30, 2010

7. Vanguard's Institutional Index Fund - Institutional Index Fund has about 56 million shares of Microsoft stocks, which comprises of 0.65% of its portfolio.
Reported on September 30, 2010

8 College Retirement Equities Fund's CREF Stock Account has about 44.8 million shares of Microsoft stocks, which comprises of 0.52% of its portfolio.
Reported on June 30, 2010

9. Vanguard's Windsor II has about 35.5 million shares of Microsoft stocks, which comprises of 0.41% of its portfolio.
Reported on July 31, 2010

10. GMO's Quality Fund has about 32.3 million shares of Microsoft stocks, which comprises of 0.38% of its portfolio.
Reported on August 31, 2010


[1] http://seekingalpha.com/article/238826-microsoft-and-oracle-two-great-value-companies?source=article_lb_author_1_t
[2] http://www.huffingtonpost.com/2010/11/06/steve-ballmer-sells-stocks-microsoft-_n_779995.html
[3] http://www.thestreet.com/story/10932135/3/hold-microsoft-investors-say.html
[4] http://www.thestreet.com/story/10924299/1/ballmer-gates-sell-microsoft-should-you.html
[5] http://moneywatch.bnet.com/investing/blog/against-grain/microsoft-hikes-dividend-23-but-stock-remains-unfairly-unloved/724/
[6] http://seekingalpha.com/article/228902-why-microsoft-should-buy-research-in-motion
[7] http://finance.yahoo.com/q/mh?s=MSFT+Major+Holders



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