Microsoft is the
world’s largest independent developer and seller of computer software products
for a wide range of computing devices. It also sells the Xbox video game
console. The company has earned between 25-40%
return on equity over the last 10 years and has grown its earnings and
dividends at a 13-14% pace over the last five years. MSFT
was impacted by the recent economic down turn, but is returning to above
average earnings growth as a result of:
(1) its dominant
position in the PC market,
(2) expansion
into the mobile space,
(3) Microsoft is
taking market share in the server business and is profiting from the enterprise
refresh cycle,
(4) the Xbox is
growing at an above average pace,
(5) acquisitions,
(6) the Bing
search engine is taking market share.
Negatives:
(1) softness in
the core computing market,
(2) intense
competition along with lagging sales in the mobile computing market.
Statistical Summary
Stock Dividend Payout # Increases
Yield Growth Rate Ratio
Since 2004
Debt/ EPS Down Net Value Line
Equity ROE Since 2004 Margin Rating
* the vast majority of companies
in MSFT industry do not pay a dividend
Chart
Note: MSFT stock
made good progress off its March 2009 low, quickly surpassing the downtrend off
its October 2007 high (red line) and the November 2008 trading high (green
line). Long term, the stock is in a
trading range (straight blue line); intermediate term, it is in an uptrend
(purple lines). The wiggly blue line is
on balance volume. The Aggressive Growth
Portfolio owns a 50% position in MSFT . The upper boundary of its Buy
Value Range Sell
Half Range
1/14
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