Microsoft Corporation (MSFT): Where’s the Mojo?

Take the case of what was once the very new technology of web browsers. It quickly became a competition between Netscape and Internet Explorer. Netscape was the first on the scene, but it lost the battle because Microsoft had its operating system in nearly every computer, and could bundle IE with it, which meant automatic ubiquity for the IE browser. But Microsoft simply does not have that same strong position these days. The strategy hasn’t changed with the times, which is why Microsoft cannot make much headway in the mobile phone industry against Apple’s iPhone, Google’s Android, and Amazon’s Kindle devices, all of which have much stronger operating platforms.

On the brighter side

In spite of its lackluster performance on the innovation front, Microsoft Corporation (NASDAQ:MSFT) is still a strong company in many respects. No other company is going to suddenly eclipse its performance on the operating system front, or unseat the popularity of the Microsoft Office software suite. These core parts of its business are what fuel some surprisingly good numbers for Microsoft, such as gross profit, net profit and operating profit margins higher than industry averages, all of which results in an ROE in excess of 30%. It also has a strong liquidity position, with current and quick ratios above industry standards.

The bottom line

Part of Microsoft Corporation (NASDAQ:MSFT)’s problem is one of perception. The basic view out there in the trenches is that the company is in a pattern of slow decline. What it really needs is something that will re-excite investors about the company. Unfortunately, that’s hard to do with its strategy of always lagging behind the exciting developments coming from other companies. On the smartphone front, Microsoft is in fourth place (3% market share), lagging behind even Blackberry (6%) and very far behind Apple (38%) and Google’s Android (52%).

On the tablet front, Apple leads the way with a 49% market share, with Google close behind at 42% and Microsoft once again very far behind at 7%. There’s simply nothing to get excited about. Until a leadership and management team takes the helm and is willing to change Microsoft’s strategy, you can expect to see its position in the tech industry continue to slip in a downward direction.

The article Microsoft: Where’s the Mojo? originally appeared on Fool.com and is written by Nauman Aly.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.