How Microsoft Lost Its Mojo in 2012

Microsoft (NASDAQ: MSFT  ) is coming off one rollercoaster of a year. The stock started out strong, easily beating the Dow Jones Industrial Average (DJINDICES: ^DJI  ) for a few months as the Windows 8 refresh looked like a powerful catalyst. But the joy didn't last: Mr. Softy soon fell back in line with its Dow peers and is currently underperforming the index year to date:

MSFT Total Return Price Chart

MSFT Total Return Price data by YCharts.

Tailwinds stopped filling Microsoft's sails when Windows 8 started looking like a mobile system bolted onto traditional desktops. The benefits of upgrading to the new software aren't clear, but users have found plenty of reason to stay with the familiar Windows 7 experience. Is this another Windows Vista disaster, or will consumers and corporations just get used to the new interface and move on? It's too early to tell, but I wouldn't be surprised to see a service pack that removes the mobile-style user interface in favor of a more traditional desktop.

And then there's the mobile market. Microsoft hoped to make a huge splash in smartphones with best friend Nokia (NYSE: NOK  ) by its side. The tablet segment would have to be covered by Microsoft's very own Surface product. When that slate was announced, system partners from Hewlett-Packard (NYSE: HPQ  ) and Dell (UNKNOWN: DELL.DL  ) to Acer and Lenovo delayed or canceled their planned Windows tablets en masse. Neither gambit has worked out so far.

The company is trying to shift more Surface tablets by expanding sales to Best Buy (NYSE: BBY  ) , Staples (NASDAQ: SPLS  ) , and other retail chains. Again, it's far too early to tell how it's going. This holiday shopping season will either make or break Microsoft's hardware ambitions.

Redmond is stuck in limbo until the Windows 8 fog clears up

It's been a frustrating path for Microsoft investors, who have watched the company fail to capitalize on the incredible growth in mobile over the past decade. In this brand-new premium report on Microsoft, our analyst explains that while the mobile opportunity is huge, the challenges are many. He's also providing regular updates as key events occur, so be sure to claim a copy of this report now by clicking here.


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  • Report this Comment On December 19, 2012, at 2:10 PM, duke88888 wrote:

    Microsoft Yawn.....

  • Report this Comment On December 19, 2012, at 3:35 PM, lucasmonger wrote:

    @MegSilberman

    There's a simple reason NOK stock is really cheap - they are losing market share tremendously and are not selling enough smartphones. No amount of quoting numbers and news articles is going to change the fact that people equate Nokia as king of the feature phone and they've moved on to Android and IOS devices.

    The Microkia smartphone prayer is a hail mary in hopes of regaining market share, but so far it appears to be failing.

    Wild and crazy idea, Microsoft buys out Best Buy to make them all Microsoft Stores in hopes of selling more Xboxes and Surface tablets, then turns it's guns towards Amazon to outprice them in Bluray, DVD, TVs, etc.

    Windows becomes a storefront for all of your purchases whether physical or digital.

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