Let’s first start by their website, take a look at it, could you think of a more hideous website, disgusting, and unusable website. Even Bill Gates admitted it back in 2003 (and trust me, the website hasn’t changed to the better since then). Remember, their website is the website of a company that has a market capitalization of over $200 billion. Their gray menu looks like it was done in MS Frontpage, and their favicon has nothing to do with their corporate logo (except, of course, the letter M). It has a very unintuitive interface when someone wants to really find something, and of course, it uses the most horrible search engine in the world.
Of course, judging a corporation by its website is not fair, but Microsoft, is after all, the biggest software developer in the world, so you really expect something more.
Now let’s move to the products. Microsoft’s huge economy depends on two things: MS Windows, MS Office. The rest is peanuts, including the XBOX 360, and its upcoming project natal technology (or whatever the current name is). It is safe to say that developed economies and most emerging economies are saturated with these 2 products, and the growth in this area is now flat. See I think that Microsoft shares the same problem with Google: Both have produced their biggest cash cow a long time ago, and the only thing that they seem to do right (most of the time) is enhancing this product, the new products they come up with are mostly flops. They’re just unable to maintain the growth and the high expectations, and they’re most likely infested by bureaucracy (you can see an example of Microsoft’s bureaucracy here).
Now let’s talk about the stock, MSFT, like most technology companies, suffered a major correction blow back in 2000, and the stock never really recovered to that level (it is trading at less than half the peak of early 2000). MSFT also suffered a major blow in April and it still hasn’t recovered (probably it’ll take a lot of time and a lot of inflation for the stock to recover to even the April level). Some say that it’s Steve Ballmer, this is a good theory, but let’s face it, MSFT hasn’t been doing great for a long long time, and it’s been trading more or less flat since 2001 (hovering between $23 and $30, with a slight peak in 2007, and a drop to $19 during the credit crunch effect in 2008).
But the nice thing about MSFT is that it’s a steady and predictable stock, if it goes down 4 or 5%, then this almost certainly means that the stock will go up the 4 or 5% in the next week or so. It’s a mature stock, that shouldn’t be traded for a long position at all (they yield, if any, will be very low).
MSFT is always a buy below $24.