Maybe so many investors are bent on finding the next Microsoft (NASDAQ:MSFT) because they got tired of waiting on the last one. Over the last four years, the software giant has seen its shares halved as antitrust lawsuits and cascading margins have kept investors away.

To put it bluntly, Mr. Softy got soft. It removed its teeth, placed them in a bedside glass, and started gnawing its gums on meager dividend payouts, suit settlements, and low-margin businesses.

But maybe Microsoft has more bite than the market gives it credit for. Last night, the company posted better-than-expected quarterly results. While earnings per share fell from $0.20 to just $0.12, revenues were 17% higher at $9.2 billion. And that was weighed down by stock compensation expenses, a European Commission fine, and a costly settlement with Sun Microsystems (NASDAQ:SUNW). Back out the legal hits -- but not the ongoing compensation charges -- and earnings would have been a heartier $0.29 a share.

As Microsoft's cash balance continues to grow and its clouded legal situation clears up, it may be time to take another look. Its subsidiary is profitable and growing nicely. That's not much of a surprise given the recent spurts at fellow online hubs Yahoo! (NASDAQ:YHOO) and Ask Jeeves (NASDAQ:ASKJ).

And yes, a 30% jump in Xbox video game console sales this quarter was a near-term hit on margins, but it will be worth it if it helps build a larger base of die-hard players who will be lapping up higher-margin software titles in the future.

While the company's flagship operating software is at the mercy of corporate spending budgets, and while Linux remains a pesky free alternative, Microsoft continues to grow. Moreover, it has positioned a number of dynamic product lines even as Wall Street was giving up on the company.

Just months from a new fiscal year, Microsoft is looking to earn roughly $1.17 a share on $38 billion in revenues in fiscal 2005. It's not every day that Microsoft fetches just over 20 times forward earnings. With the economy showing signs of life, online content bringing in the dollars, and the prospects for video game subscriptions and royalties growing, forget the fact that Microsoft is smiling these days.

Look! Closer! Microsoft's wearing teeth again!

Do you think Microsoft is back or has it matured into a sleepy has-been? What will the company do with its more than $56 billion in greenbacks? All this and more -- in the Microsoft discussion board. Only on

Longtime Fool contributor Rick Aristotle Munarriz has been using Windows for ages but he does not own shares in any of the companies mentioned in this story.