Buy, Sell or Hold: With $44 Billion in Cash and a Focus on Shareholder Value, It's Time to Buy Microsoft Corp. (Nasdaq: MSFT)The last time I recommended Microsoft Corp. (Nasdaq: MSFT), Bill Clinton was in the White House. But it's time to take another look at the "cash-flow-engine" that Bill Gates built - and to explain why Microsoft is a "Buy" in today's stock market.
Microsoft is one of the safest investments in the world, but the software giant's stock price has done essentially nothing for the last 10 years. But the company is still a monopoly, has no debt, and continues to generate a torrent of cash.
In fact, Microsoft now has one of the largest cash hordes in the history of capitalism - more than $44 billion, and growing.
So what's different? What's the catalyst that promises to break this giant out of its somnambular state, to make its shares a "Buy?"
The Bright Future for Cloud Computing is Becoming Much Clearer
The cloud computing industry has yet to fully take off, but for an indication of its potential, look at the players getting involved.
Microsoft Corp. (Nasdaq: MSFT), Hewlett-Packard Co. (NYSE: HPQ), Oracle Corp. (Nasdaq: ORCL), Google Inc. (Nasdaq: GOOG), and Amazon.com Inc. (Nasdaq: AMZN) - the biggest names in the tech sector - are all racing to take the lead in this burgeoning industry.
So what's all of the excitement about?
Buy, Sell or Hold: Despite Challenges, Innovation Will Provide Long-Term Boost to Software Leader Microsoft Corp. (Nasdaq: MSFT)
Thanks to some shrewd maneuvering with its first major software contract in the early 1980s, Microsoft Corp. (Nasdaq: MSFT) built itself into a tech giant and software powerhouse. But the global financial crisis and increasing competition are eroding that longstanding dominance.
There's no doubt the company has made successful strategic decisions for decades.
Founder and Chairman William H. Gates III established Microsoft in 1975 and made it the worldwide leader in software products and services, including operating systems for servers, personal computers and intelligent devices, server applications, business solutions applications, software development tools and video games. It offers product support and consulting services on its impressive array of products, including its widely used Windows operating systems and Microsoft Office software suite.
Tech Stocks Priced for Bargain Deals, Edge Higher on Analyst Upgrades
Analyst upgrades lifted the technology sector on Monday, as cheap valuations and strong balance sheets in tech companies are making for good buys, as outlined in Money Morning's Midyear Forecast on tech stocks.
Analysts say tech stocks haven't been this cheap since 1992, excluding a brief period before the March 2009 bull market started, and now is the time to buy.
"Tech stocks have some of the strongest balance sheets in the S&P 500," Bruce Bittles, chief investment strategist of Robert W. Baird & Co., told Bloomberg. "The valuations are inexpensive - that's another plus. It's a good time to invest in tech."
Hot Stocks: Can Apple Be a Gentle Giant?
Apple Inc. (Nasdaq: AAPL) yesterday (Thursday) supplanted Microsoft Corp. (Nasdaq: MSFT) as the largest technology company in the United States. Apple now trails only Exxon Mobil Corp. (NYSE: XOM) in size, but that size will only make the company a bigger target if it fails to use its newfound market position prudently.
Just last month, Microsoft's market capitalization exceeded Apples by some $25 billion. But Apple has finally overtaken one its great archrivals. But being the new standard bearer for the technology sector brings with it more than bragging rights. It also will make Apple a bigger target for its competitors and government scrutiny.
As far as competition is concerned, there's no question that Apple has outdone Microsoft.
Pacifying the Panda: U.S. Companies Must Take a New Approach to China
There's no question about what kind of profit opportunities the Chinese market offers. Moreover, the willingness of U.S. companies to partner with China in the pursuit of profit is equally blatant.
So why is it that more U.S. businesses feel less welcome in China now than they did four years ago?
The fact is that in the past four years, China's economy has continued to grow by leaps and bounds, while a humiliating financial collapse and soaring debt have tarnished much of the shine that once adorned the U.S. market.
Indeed, for the first time in perhaps more than a century China has the upper hand. How long that will last is a difficult question to answer, but right now, China wants to use its leverage to support domestic companies - and it's doing so unapologetically.