Thursday, January 22, 2009

Microsoft

There is no question that the news from Microsoft this morning was rather bleak, but it certainly was nowhere near as gloomy as most commentators and analysts suggested. Sure, earnings were a "miss" and a decline, but overall not so bad relative to the nosedive that the economy has taken. A number of analysts expected (demanded?) steeper job cuts, but Microsoft should get credit for continuing to invest for the future.

Personally, I am maintaining my current position. After all, the dividend yield is now over 3%. I would be tempted to buy a little more, but that is not a viable option given that my income has stopped and I am living on cash savings, potentially for some number of months until I line up new income.

I see Microsoft as a long-term value play. I do not have the money or nervous frenzy to trade and speculate in "hot" stocks such as Apple, Google, and RIM.

-- Jack Krupansky

2 Comments:

At 8:57 PM EST , Anonymous Anonymous said...

General Electric is where all the fun will begin tomorrow.

 
At 2:39 AM EST , Anonymous Anonymous said...

Microsoft is a company on a long-term decline. Its previous cash cow (Windows) is under great strain from sub notebooks running Linux (Free OS). They can no longer enjoy the windfall "Microsoft Tax" of royalties for every PC sold when Windows price is over $100 and the new PC category is under $300 per unit sold. MSFT greatest cash cow (Office) is next to fall. I tried a few (free) alternatives and they are all good enough (albeit not perfect) as replacements.

Also: cash reserves have dwindled tremendously in the past few years (40 B to about 19 B) - not just because of paying dividends but mostly because the cash cows are dying and the new hopes (Xbox, Zune, MSN) are great money sinks.

For your own good, and my honest concern for you since I appreciate your thoughtful writings, I wish you wouldn't count on MSFT to go up in the future.

My take is that Microsoft is long-term risky. it will become an even greater "value play" as years go by.

That said, I wouldn't sell after the bad news because that's obviously bad timing. I'd wait for some good news and price spikes to lighten up.

 

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