I bought some more Microsoft this morning. I did not buy it for the yield, though 3 percent is a nice plus if it takes a year or two to see some of the gains I expect.
I think Satya, the new CEO, might be moving up within $MSFT at the right time. I liked this point he made in his first interview as CEO witth the New York Times:
Longevity in this business is about being able to reinvent yourself or invent the future. In our case, given 39 years of success, it’s more about reinvention. We’ve had great successes, but our future is not about our past success. It’s going to be about whether we will invent things that are really going to drive our future.
I think this is exactly what Wall Street will be looking for. The stock is not cheap trading at 4 times sales, but I like the $83 billion in cash. Today, the only product of theirs I use is Skype. I have to believe he can help change that.
If the money gets spent poorly, the stock will get punished. If they keep chasing Apple and Google in the phone business, I imagine the stock will drift and I will be stopped below $35/share. As Ben Thompson says – ‘They Can’t Afford the Mobile Muddle‘.
It is the enterprise and cloud that might get Wall Street super excited. Maybe it’s Salesforce at $50 billion (a nice premium), or Box.net or Dropbox before they get public. Here is a chart to give you some perspective on the price:
In 1997 Steve Jobs told MacWorld this:
We have to let go of this notion that for Apple to win Microsoft has to lose. We have to embrace a notion that for Apple to win Apple has to do a really good job, and if others are going to help us, that’s great, cause we need all the help we can get…The era of setting this up as a competition between Apple and Microsoft is over as far as I’m concerned. This is about getting healthy, and this is about Apple being able to make incredibly great contributions to the industry, to get healthy and prosper again.
Satya can change some names and will need to add a few because this era is even tougher, but at least Satya has the cash, margins and the 39 years of profitability to work with.
I do think Satya and Microsoft will need the continued bull market at his back, so as usual, I am not in love with the stock or Company. It is just a piece of paper in the end.
Many of Meg Whitman’s comments today fantail nicely with
your thesis. She sees “brightness” in the PC market:
“Business is understanding and employees are understanding that they may
want a tablet, but they also need more traditional compute devices to get their
work done that is going to be required in this world of big data and analytics.”
thanks
Salesforce at 50B . C’mon Howard .. Talk about a crazy move to punish the stock. Plus, shouldn’t you disclose that you own Salesforce – I recall CRM overpaid for some little company you had invested in …
As always I WOULD disclose, I dont own any salesforce , sold it all last year …as far as disclosure sounds like you might be pissed off and short salesforce and just trolling.