The 5-Year Outlook for This Dow Stock: Microsoft

• Report this Comment On February 07, 2012, at 10:31 AM, dastaub22 wrote:

  i remember when the generic advise for MSFT was to stop wasting money on the XBox. I assume the same process will occur in phones.

• Report this Comment On February 07, 2012, at 10:44 AM, DavidTheJust wrote:

  You don't say anything in video other than how you "feel" about the company. It would be helpful if you actually had commentary on how MSFT makes money, how they plan on making (more) money in the years ahead, and why it seems likely that they will be successful or unsuccessful in doing so.

  Some obvious points to touch on:

  1. Because GOOG uses MSFT patents in its Android phone system, MSFT gets a royalty on every phone purchased with an Android operating system. How much is that worth to MSFT?

  2. The Windows phone system is actually quite good. It will be interesting to see whether NOK can gain back market share, but you seem to assume that Apple and Google have a permanent advantage in this area (If that was the way things worked, NOK would be the world's most valuable company right now based on their position in cell phones in the late 90s).

  3. Undoubtedly the growth is in smart phones and tablets, but that doesn't mean that PCs are going away. Have either of you moved to the place where you don't own a desktop or laptop computer?

  4. The long term growth of the worldwide economy means that many more people will be buying computers over the next 20 years. MSFT doesn't need hockey-stick growth to be successful in this area. Instead it can start running its company the way IBM does by managing cashflow to invest in gradual steady growth while buying back stock and paying higher dividends year after year. Furthermore, all those smartphones and tablets means a lot more servers are going to be needed. MSFT's server business would be a very large company if it were a stand-alone business (see below).

  5. MSFT has a large business focused on servers, ERP, CRM, etc ... that you didn't even mention. Given that Microsoft's servers and tools division had over $17 billion of revenue last year while its Business division had over $22 billion of revenue makes this a really odd omission.

  6. It is worth noting that MSFT nearly doubled earnings per share during the past five years, which included the worst recession since WW II.

  Best wishes,

  David

  long MSFT (as of Jan 2011)

• Report this Comment On February 07, 2012, at 11:02 AM, techy46 wrote:

  Consumers, especially advertising, executives and marketing types, hate PCs because they're technically challenged and couldn't even setup a VCR. They love the mantra that the PC's dead or we're in a post-PC era. Apple caters to this by building and designed devices for the these challenged individuals but the PC's really mobile and it will ead to great thiings for Intel and Microsoft once the gadgets become commoditites.

• Report this Comment On February 07, 2012, at 11:28 AM, sharktopus wrote:

  I strongly disagree with this assessment of MSFT.

  1. Microsoft has a long history of 1-upping the competition. As datasub22 mentioned, take a look at the original xbox. Microsoft took a calculated risk with capital they could easily spare, and took a large belly flop. They entered the market and learned some valuable lessons, though. Enter the xbox360, aka round 2. Hugely profitable. This type of thing has happened as far back as the Lotus123 days.

  2. I would venture to guess that the mobile market will be no different. The future is in easy ubiquitous integration of tech devices. When you talk about integrating your mobile devices, you talk about syncing data/functionality with your PC/Laptop software, which Microsoft still has an overwhelming market share of.

  3. Back to #2, I doubt the PC is going away anytime soon. There will be many growing applications for mobile devices, but I have not spoken with any professional that feels that they could even begin to run their business on exclusively mobile platforms.

  I have no doubt that this will gradually change as the mobile sector takes a stronger hold of business applications, but MSFT is in a great place to seamlessly segue with windows 8/snapdragon.

  The jury is still out on whether MSFT will have any trouble in the mobile market. I find it hard to justify an opinion of doom and gloom for a company with heavy cash reserves, copious cash flow, relatively low operational costs, and a finger in quite a few tech futures.

  Just my 2c. +1 for MSFT.

  Aaron

• Report this Comment On February 07, 2012, at 12:02 PM, techy46 wrote:

  Very amateurish. The consumer ecosystem is evolviing to the point that the enterprise ecosystem was 10 years ago. We'll see a shift towards intergated mobile communications like enteroprises have had fo the last 10 years and Microsoft has lead that in the enterprise. Sure, a lot of novices will use Apple's clients but Microsoft will have equally impressive clients and you won't see Apple servers in the enterprise anytime soon. XBox is already the home entertainment server and Nokia Windows Phones will be the mobile consoles along with Anroid and IOS gadgets.

• Report this Comment On February 07, 2012, at 12:34 PM, ReTeacher01 wrote:

  Interesting to me is that SSD improvements, voice recognition and Skype are what I see as next big steps and no mention in the comments.

• Report this Comment On February 07, 2012, at 1:22 PM, Ironbob wrote:

  IT'S NOT JUST ABOUT THE PC! One sector that never gets mentioned is the workstation sector. A workstation typically isn't just a PC but amped up to support many graphic intensive programs such as modelers, engineering graphics etc.

  This sector used to be dominated by Sun Micro, IBM and Silicon Graphics using UNIX. MSFT single-handedly bankrupted all those companies with Windows NT which is the exclusive tool used for those applications. THAT HAS NOT CHANGED IN OVER 10 YEARS and will not change in the next 10 as that sector has all but been abandoned by any competition to the Window OS.

• Report this Comment On February 07, 2012, at 8:15 PM, jdwelch62 wrote:

  Lousy video, guys. Bad call to give MSFT a thumbs down. Good commentary from those who've left Comments so far. Way too early to say that Apple and Google will be the only players in the mobile space. Windows 8 shows much promise for the tablet space, which is less than 2 years old, if you consider the introduction of the iPad was the "beginning" of tablets (which it really wasn't, but for the sake of argument and from the position of the average consumer, let's say that it is). And, I think Windows Phone on Nokia handsets have a great chance at chomping into the smartphone marketspace.

  Another thing not mentioned about MSFT is their Kinect technology. The potential applications for that are incredible. Consider that most (almost all?) laptops have a camera built into them (facing the user at the keyboard), and that Intel has had WiDi in its Core i5 and i7 processors for over a year (which allows you to wirelessly stream video from your laptop to your TV), then think about your ability to control your largest media consumption device in your home, your TV, from your laptop on the couch with simple gestures. This is just one small example.

  Why you guys continue to say things like "the PC is dead" and "this is the post-PC era" are beyond me! The PC has been, is, and continues to be EVOLVING! By way of comparison, consider cell phone technology: in 1984, when the first cellular markets came online in the USA, almost all cell phones were car phones, with the notable exception of the Motorola "brick", which you could never fit into your pocket like you can with today's phones, and cost around $2,000 making it prohibitive to buy. Roll the clock forward 8 years to about 1992 when Motorola came out with the first "flip" phone, and now you had something that you could almost fit in your pocket, but was still very expensive and had terrible battery life. The iPhone was introduced in 2007, but I had Windows-based "smartphones" before that. So here we are in 2012; it's been 22 years since cellular was introduced in this country, and now virtually everyone has some form of a cell phone, and we take them for granted! PCs have similarly evolved from desktop-only choices (and I include Macs in this discussion, because they're also "personal computers") to huge, clunky, heavy "portable" computers that I can remember consultants from the Big 8 firms like Coopers & Lybrand lugging around to country, to what we have today in laptops, Macbooks and Ultrabooks. By the end of this year you will see that the line between a "tablet" and a "PC" will have blurred to the point where you're not really going to care what you call it...

  Sorry, went off on a rant, there. But, honestly: Please get your heads out of the Present, Study and Learn from the Past, and Project into the Future!...

  Fool on! :-)

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