Microsoft (Nasdaq: MSFT) is under fire. Longtime CEO Steve Ballmer must feel like a whack-a-mole puppet in its 10th year of use. While the company has recently seen market share gains in online search, Microsoft is still largely failing in its ambitions to catch Google (Nasdaq: GOOG) there. Its erstwhile offer to acquire Yahoo! floundered. Attempts to catch up with Apple (Nasdaq: AAPL) in consumer electronics (Please, just forget the Zune already!) failed, the company was far too late in coming up with a viable platform for mobile phones, and now it's buying Skype for a seemingly outrageous $8.5 billion.

Whack-a-mole? Maybe I'm being generous. Microsoft might seem more like a pinata, one more strong whack away from bursting. With all these threats, should investors really place Microsoft on their watchlist? The company might have several notable flops, but it's also still dominant in PCs and trades for a P/E less than 10. Here are a couple key opportunities and threats those contemplating investing in Microsoft should consider.

Opportunities for Mr. Softy
Microsoft might prove more resilient than the casual observer would believe. For one, the company has worked hard to catch up to changes in the online world. I personally attended the company's World Partners Conference last year and saw the commitment Microsoft was placing on going "all-in" to the cloud.

That's both good and bad. It's good because Microsoft is getting out ahead of the curve rather than fruitlessly trying to stop trends that are beyond its capability to abate. The company's Azure platform creates a Microsoft-friendly platform-as-a-service for the next generation of companies that put their entire infrastructures on the Web.

But that's just the beginning. Microsoft is also placing its entire suite of productivity products in the cloud. That gives better interoperability between ShareP oint, Word, and Dynamics programs that manage functions like accounting. That's a huge advantage, especially in today's world where plenty of companies are still "Microsoft shops." Microsoft still has time to retain these companies and reorient itself toward the future.

Threats on the horizon
Yet challenges still remain. The most obvious headwind is mobile computing. While Microsoft is completely dominant in PCs, it hasn't been able to adapt Windows to smaller devices like smartphones and tablets. In the first quarter, researcher IDC estimated that global PC shipments fell by 3.2%. Microsoft wasn't able to buck the trend, as Windows revenue fell by 4% last quarter. The company managed to avoid Windows dragging down overall company revenues by posting higher business software sales and with the continuing momentum of its Kinect controller. Overall, sales were up 13% year-over-year in the first quarter.

Microsoft is backing up that claim of moving "all-in" to the cloud and is devoting added resources to capturing more sales in emerging areas like online CRM from salesforce.com (NYSE: CRM), cloud-computing hosting from Amazon.com (Nasdaq: AMZN), and virtualization from VMware (NYSE: VMW). However, for a massive company like Microsoft, these areas alone might not make up for weakness in other areas.

In the end, if PC sales wane, that'll point to a future where light operating systems likes Apple's iOS and Google's Android are increasingly prominent in the technology sphere. That would also have an add-on blow of decreasing Office sales as well. Under this scenario, falling behind will cause Microsoft to reach out for increasingly reckless buys in search of growth. Call the misguided $8.5 billion Skype acquisition the canary in the coal mine.

Final thoughts
Microsoft is a tremendous value play that is increasingly being trumpeted by top value-investing experts. Earlier this week, I noted the amazing P/E compression Microsoft has undergone in recent years. Still, the best way to stay ahead of opportunities and threats facing Microsoft is to keep up with the news surrounding the company. The Motley Fool recently introduced a free My Watchlist feature that allows users to stay ahead of the curve and receive up-to-date news on companies like Microsoft, or any of its competitors. To get recent Microsoft news and analysis, add the company to your watchlist today: