Let me start out this way. As a shareholder, I'm not overly impressed by Microsoft's (NASDAQ:MSFT) latest quarterly filings. (The details are here.) Hey, I like it as much as the next slob when my company "beats by a penny" rather than "missing" what Mr. Market expects to see.

Here's what I wonder: Just what did Mr. Market expect? Vista's been moved back. Client and Information Worker (which really depend on the new OS to get a kickstart) are creeping along. The hottest Microsoft home product, the Xbox 360, is still operating in a negative margin mode, by design. (The firm's desperate need to bring on capacity in that segment in order to meet console demand contributed to the "miss.") I wasn't surprised at all by the shortfall, but the market's reaction -- an 11% haircut -- looks funny to me.

No surprise, but after a brief reprieve, it's popular once again to dis Mr. Softy, which is why we're seeing plenty of post-earnings comments like, "Microsoft is spending like it's 1999." That might sound like a pithy way for analysts to get their bash on and make sure they get their names in print, but it's not very accurate. Actually, as a percentage of revenue, selling, general, and administrative spending is running about 29.7% so far this year, which is much worse than 1999's. It's not quite up to 2003's 31% level, however.

So, yeah, operating margins aren't so hot right now, and Microsoft's got more spending on the way. But taken alone, that's not an investment thesis. What's important is what you think will happen in the future and, finally, what's the price you're paying?

Despite the media's constant, ill-informed drumbeat about the "threats" out there, Microsoft has continued to gain ground in important areas like servers and enterprise systems, even in the face of stiff competition from the likes of Red Hat (NASDAQ:RHAT) and IBM (NYSE:IBM). While Google (NASDAQ:GOOG) is supposedly going to eat Microsoft for lunch, it's actually Google that has to watch out. Microsoft currently notches little in the way of Internet ad revenue, so any gains will be gravy.

Xbox 360 is a money-loser by design (for now), and Microsoft's new Internet initiatives are mostly languishing in beta. (I'm already a user of Live.com and the new Internet Explorer, and they're certainly better than current MS offerings in those areas.) Meanwhile, mobile is still in its infancy but growing quickly, and Vista is way out on the horizon. That situation has not only dented Microsoft but also dimmed some people's opinion on the outlook for equipment providers like Intel (NASDAQ:INTC) and Hewlett-Packard (NYSE:HPQ).

So, sure, there's uncertainty and short-term pain, and if you're one of those people who think Microsoft can do no right, by all means, stay out. Here's what I've got to say: "Keep it coming."

I'll take all the cheap Microsoft shares I can get, thanks. I ratcheted back my earnings and cash-flow growth estimates, and I still have a really hard time getting Microsoft to look like it's worth anything less than $30 per share. I think $32 is about right.

Am I 100% sure that'll work out great? Nope, we can never be that. But I am sure that there's not a ton of risk here. There's a very strong cash-flow stream that ought to continue growing -- much of which is paid directly to us owners through dividends. Google at $500 a share? All yours. I'll take the stuff Mr. Market doesn't like, especially when the math works out like this.

Microsoft and Intel are Motley Fool Inside Value recommendations. A free trial will let you find out why.

Seth Jayson likes to think he knows cheap when he sees it. At the time of publication, he had shares of Microsoft but no positions in any other company mentioned. View his stock holdings and Fool profile here. Fool rules are here.