Microsoft Stock a Better Choice Than Apple?
In the 1990s, Microsoft Corporation (NASDAQ/MSFT) was the toast of Wall Street and arguably one of the top technology growth stocks in the world, based on my stock analysis.
At that time, personal computers (PCs) and laptops were the only computing devices around, as portable mobile devices were not widely developed yet. Microsoft, of course, developed the “Windows” operating system and associated applications. There was no real competitor at that time; Apple Inc. (NASDAQ/AAPL) was really not considered a valid threat yet, according to my stock analysis. In fact, Apple was on the fringe as its stock price languished at the dollar range.
Fast-forward a couple decades and now we see Apple at the top of the mobile devices ladder, while every other company tries to latch on, based on my stock analysis.
As my stock analysis indicates, during Apple’s rise, Microsoft was essentially comatose, having focused too intently on its operating system and on the PC platform. The company, under former CEO Steve Ballmer, failed to recognize the move to the mobile space. According to my stock analysis, this left Microsoft in a lurch, becoming a fallen star on Wall Street.
Luckily, Ballmer was cut and replaced with CEO Satya Nadella, who has made Microsoft relevant again to the investment community via his vision and focus on the growing technology spaces, such as mobile devices and cloud computing.
The stock has advanced 29.11% over the past 52 weeks, easily outperforming the 11.64% move by the S&P 500.
Chart courtesy of www.StockCharts.com
In addition to the Windows operating system, my stock analysis notes Microsoft has been shifting its energy into the mobile space via “Office” applications for the hugely popular Apple “iPad,” a soon-to-be-released Microsoft-branded mobile phone (from the purchase of Nokia’s mobile unit), and cloud applications. The company is also rapidly building up its gaming unit via its “Xbox” line.
The company’s fiscal first quarter reflected its progress, based on my stock analysis. Revenues came in at $23.20 billion, up from $18.53 billion in the year-ago fiscal first quarter. The company also beat the Thomson Financial consensus earnings-per-share (EPS) estimates for the third time in the past four quarters after reporting $0.54 per diluted share, $0.05 above consensus.
A significant metric was a 47% jump in revenues from its device and consumer segment to nearly half of total revenues. Sales of its “Surface” tablets continue to be muted at $908 million, or less than five percent of revenues.
What I liked were the strong sales of the company’s Xbox console, with 2.4 million units sold in the quarter, up 102% year-over-year. Microsoft just cut the price of its console, which should help ramp up sales against its rival console, “PlayStation,” made by Sony Corporation (NYSE/SNE).
As my stock analysis would indicate, Microsoft has become important again. With net cash of $65.0 billion, the company is well positioned to become a Wall Street star for a second time.