Microsoft Corporation (MSFT)’s Final Blow?

Valuation

These companies have all been established for a long time, but some still offer a better price than others.

All three companies issue dividends, and Apple Inc. (NASDAQ:AAPL) has the shortest history of the three. Microsoft Corporation (NASDAQ:MSFT) has increased its dividends for ten years. Hewlett-Packard Company (NYSE:HPQ) has issued dividends for more than ten years, but they remained level from 2003-2010, then increased over the past two years. Apple started issuing dividends last year and plans to release $100 billion to shareholders by 2015. Apple, Hewlett-Packard, and Microsoft have dividend yields of 2.6%, 2.1%, and 2.5%, respectively.

Apple Inc. (NASDAQ:AAPL), Hewlett-Packard Company (NYSE:HPQ), and Microsoft Corporation (NASDAQ:MSFT) also have free cash flow yields of 11.1%, 19.6%, and 9.3%, respectively. All seem pretty cheap when viewed in that way, but how about an earnings yield? 9.9%,  -26.2%, and 5.5%, respectively, not to mention that Apple’s P/E is nearly half of Microsoft’s.

The bottom line

Apple Inc. (NASDAQ:AAPL) is clearly the cheapest of these three companies, and it should benefit from a rising number of iPad users. Hewlett-Packard Company (NYSE:HPQ) is using the new Leap Motion technology to try to persuade users to purchase PC’s, and Microsoft Corporation (NASDAQ:MSFT) is reshuffling its management to focus on devices and services. All have some degree of upside, but remember, reputation is everything. Will Microsoft be able to overcome slumping PC sales and the enormous job of restoring what is considered a vile reputation by many?

The article Microsoft’s Final Blow? originally appeared on Fool.com and is written by Tyler Wofford.

Tyler Wofford has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Tyler is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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