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3 Reasons to Sell Microsoft Today

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A sputtering economy, implosions at financial institutions, or just plain bad management -- on any given day, investors can name a number of reasons to sell a stock. Yet while panic is never beneficial to investors, it's good practice to play devil's advocate with investments from time to time.

In Motley Fool CAPS, more than 125,000 members have weighed in on nearly 5,400 stocks, sharing bullish and bearish opinions alike.

In the case of software stalwart Microsoft (Nasdaq: MSFT  ) , a total of 12,460 members have weighed in on its chances of success. I've already plucked out some of the bullish rationale backing Microsoft today, so here are three counterpoints to consider, courtesy of CAPS:

Vista: Microsoft lost nearly half its value in 2008 as it faced a tough year like many other tech companies. But it wasn't all due to events outside the company -- many argue that Vista did a spectacular job at lowering the company, as the unpopular operating system was shunned by many corporate users.

Enemies advancing: Google (Nasdaq: GOOG  ) leads search advertising, and many think buying Yahoo! (Nasdaq: YHOO  ) is the only way Microsoft has a shot at competing. On top of this, (Nasdaq: AMZN  ) is a cloud computing threat, and Zune lags far behind Apple's (Nasdaq: AAPL  ) and SanDisk's (Nasdaq: SNDK  ) music players.

Oh yeah, and the once-ubiquitous Internet Explorer is losing ground to competitors.

Reached its peak: Providing more growth for shareholders becomes difficult for large companies like Microsoft or Oracle (Nasdaq: ORCL  ) . To move the needle, Microsoft needs to make huge investments and take big risks. And lots of issues drag on the firm, such as antitrust suits that have already had the company shelling out over a billion dollars in fines to European regulators.

Of course, Microsoft has survived and thrived despite huge obstacles in the past. But the question about whether the company can do so going forward is why CAPS is such a great resource to augment your own analysis.

To see what the very best CAPS members are saying now about Microsoft, just click on over to Motley Fool CAPS and have a look -- it's all free, and open to your opinion.

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Fool contributor Dave Mock is all for willpower and positive thinking, until ice cream sandwiches are part of the equation. He owns no shares of companies mentioned here. Microsoft is an Inside Value pick. Google is a Rule Breakers recommendation. Amazon and Apple are Stock Advisor picks. The Fool's disclosure policy can walk 30 feet across red-hot coals, but gets burned every time.

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 22, 2009, at 3:46 PM, MichaelMartinez wrote:

    Acquiring Yahoo! or Yahoo! search won't help Microsoft. They already attract about 100,000,000 search visitors per month -- compared to 60,000,000 for Yahoo! and 137,000,000 for Google. Microsoft should approach Google's search audience size this year.

    In the meantime, Microsoft has worked a deal with Amazon to carry Microsoft pay-per-click ads and Microsoft Search on their popular Alexa site (the Alexa search engine is being retired).

    Let people beat up on Microsoft's stock all they want, but the financial analyst industry doesn't understand how search engine market share really works. The reports coming out of Compete, comScore, Hitwise, and Nielsen are all based on number of queries performed -- but most of the queries at Google no longer send traffic to other sites. Google has become a direct information provider and Microsoft's live now appears to be the largest pure search engine left.

    If I had to guess, I would guess that Microsoft will continue to expand its search services and grow its audience.

    Quantcast estimates that only 10% of Google's visitors account for 50% of those inflated Google queries. That's a very small market for advertisers to be chasing.

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