Although it has yet to happen, people are on the edge of their seat wondering when Microsoft Corporation will release the “next big thing” which allows it to break out from the shadows and prove its prominence once again.
Jeff Reeves of MarketWatch recently took a closer look at this phenomenon in his piece entitled: Microsoft: Nothing to offer beyond the Dividend
He starts off by noting the following:
“To be clear, I’m not one of those post-PC bears who thinks Microsoft is doomed. I believe Microsoft will be around for many years to come.”
As you can see, he shares the same sentiment as many. It is not that Microsoft Corporation (NASDAQ:MSFT) is doomed for failure at some point in the near future. that being said, it is hard to imagine a situation in which the stock is going to take off and offer better returns.
For those who are unfamiliar with the way things usually work with Microsoft Corporation (NASDAQ:MSFT) stock, Reeves does a great job by offering the following rundown:
“Valuation: The valuation is more than fair, with a price-to-earnings ratio of 9.7 according to Standard & Poor’s fiscal 2013 forecasts of $2.88 in EPS. Use full-year 2014 forecasts of $3.11, and you get close to 9.0.”
“Cash: Microsoft has $66 billion in cash — enough to buy both Hewlett-Packard (HPQ) and Dell (DELL) combined. Even though almost $58 billion of that is overseas and could be subject to taxes if repatriated, that’s a huge chunk of change.”
“Windows Isn’t Dead: Windows and Office remain dominant and profitable. While tablets are ascendant, desktops and laptops will remain necessary to the workplace in some form for many years.”
“Sleepy But Profitable Products: While Bing or the Windows Phone or Surface lack the dominance of Windows, that doesn’t mean they are failures. Sure, they may never have a cult following, but that doesn’t mean they don’t make money.”
“Dividend: Microsoft has more than doubled its dividend in the last five years to 92 cents annually — a roughly 3.3% yield — and the payout ratio is a very sustainable 31% in fiscal 2013 that could signal further continued increases in years ahead.”
With all this in mind, investors often times wonder if there is anything right now that sets Microsoft Corporation (NASDAQ:MSFT) apart from the competition. Even more so, they wonder if something could change in the future to help the company set itself apart from the competition.
Reeves finishes the piece by saying:
“Remember, Microsoft has been dead money for a decade. Barring a three-month run in late 2007 and a few weeks in 2012, MSFT stock has failed to break north of $32. And there’s no reason that will change anytime soon.”
Do you agree with this assessment of Microsoft Corporation (NASDAQ:MSFT) or do you think the company is ready for something bigger in the near future?
Check back here for more updates on Microsoft Stock History.
DISCLOSURE: I have no positions in any stock mentioned.
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