Microsoft Pushing Higher on Hope for New Products

The Dow Jones Industrial Average has fallen today, but Microsoft is up as it prepares to expand its product line.

Jul 7, 2014 at 3:30PM

The Dow Jones Industrial Average (DJINDICES:^DJI) slipped 0.32% late in trading today as investors came back from the Independence Day holiday. There wasn't any significant economic news today, but last week ended with a Labor Department report that showed 288,000 jobs created in June, another sign that the economy is picking up steam.

Economists and the Federal Reserve predict that U.S. economic activity will return to growth in the second quarter, following the first quarter's 2.9% drop. If it does, the optimism the market is displaying by regularly hitting new highs will be validated.

Microsoft one of the Dow's leaders
One of only a handful of companies moving higher as trading wound down today is Microsoft (NASDAQ:MSFT), which was up 0.4%. Investors have their eyes on a few products that would continue the company's transformation from strictly software to devices.

Msft Windows Start Image

Microsoft is trying to make the look of its start screen more uniform across its products.

The first notable product is the Xbox One's Kinect sensor, which will soon work with Windows. The sensor is set to ship July 15 and will include a wider field of view; developers will also be able to create apps for the device through the Windows Store. It'll take time to see if the device is a success, but at least Microsoft is pushing the envelop of its offerings and doing more to integrate its wide range of products.  

Potentially more important is speculation that a smaller version of the Surface tablet is back in production. Microsoft earlier this year revealed a larger 12-inch Surface Pro 3 that is intended as more of a laptop replacement than most tablets. But there's still a hole in the product line where a smaller tablet could go, and that product is reportedly coming later this summer.  

Microsoft has faced significant criticism in recent years because it hasn't been as nimble to new markets as rivals like Apple, which invented entirely new markets. However, from an investment perspective Microsoft has still done extremely well. You can see below that over the past decade revenue is up 120% and net income is up nearly 180%.

MSFT Revenue (TTM) Chart

MSFT Revenue (TTM) data by YCharts.

As Microsoft rolls out new cloud features, further integrates its enterprise software, and gains a larger share in smartphones and tablets, the company should remain a tech powerhouse. Few companies can build the scale Microsoft has in tech, and that scale will be extremely important as devices and connectivity increase in the future.

The battle for your living room will be epic
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had for companies like Microsoft. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 


Travis Hoium manages an account that owns shares of Apple. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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