MSFT

A ten-year chart of Microsoft (MSFT) is not a pretty site. Excluding dividends, shares are down a little over 10%, and the PE has contracted from above 40 to, at times, below 10. In the same time period, Microsoft has gone from a Wall Street tech darling that dominated computing to a dinosaur, legacy tech-company. Regardless of how accurate such a description may be, investors have in droves fled to Apple (AAPL), which makes innovative consumer devices that have impressed the masses. During this same time period, Microsoft has had a few wins, including Windows 7, continued excellence with its Office products, Xbox, and Kinect. Throughout the same period we’ve also seen the Zune, unsuccessful tablets, a weak mobile strategy, … Read more

Microsoft (MSFT), one of the larger holdings in the portfolio of our Dividend Growth Newsletter, reported solid fiscal second-quarter results Thursday on the heels of strong corporate demand and holiday sales. We continue to be pleased with Microsoft’s performance and maintain our view that the shares continue to have valuation upside potential. The firm’s revenue advanced 5% from the prior-year period thanks primarily to expansion in its Server/Tools and Entertainment/Devices segments, which advanced 11% and 14.5%, respectively. The Business Division, its largest segment, increased 3% from the prior-year period, and the firm noted that it has sold nearly 200 million licenses of Office 2010 (in the 18 months since launch). Revenue in the firm’s Windows division fell 6%, and management … Read more

On Thursday, Microsoft (MSFT) reported in-line fiscal first-quarter results. We are maintaining our mid-$30s fair value estimate and think the firm would be a nice addition to our Best Ideas portfolio upon technical improvement. We’re also not hurting for additional technology exposure, as we already hold eBay (EBAY), Intel (INTC), and Apple (AAPL). The software giant’s revenue advanced 7% in its fiscal first quarter, while net income and diluted earnings per share jumped 6% and 10%, respectively (the bottom line number met consensus, but disappointed some). All major reporting segments—Windows, Server and Tools, Online Services, Microsoft Business, Entertainment and Devices—experienced top-line expansion,  though only its Server and Tools (read “cloud”), Microsoft Business (“Office”), and Online Services divisions (“Bing”) showed improvement in … Read more

Microsoft (MSFT) reported decent fiscal fourth-quarter results Thursday that showed strong sales of its Server and Tools products, Microsoft Office 2010, and its Xbox 360 entertainment platform. Revenue advanced 8% from the same period a year ago, while net income jumped 30% thanks in part to a lower tax rate. Overall, we were pleased with the quarter, despite the ongoing earnings weakness at its online business and declining growth at Windows, and we are maintaining our $35 fair value estimate of Microsoft’s shares. The firm’s Business Division had a strong showing, with quarterly revenue up 7% during the period, and the firm indicated that Office 2010 continues to be the fastest selling version of Office in history. The firm’s Server & … Read more

This article appeared on Seeking Alpha. Please view disclosures: https://seekingalpha.com/article/279186-a-deep-look-into-microsofts-valuation As part of our process, we employ a discounted cash-flow model to arrive at a fair value estimate for every company within our equity coverage universe. In Microsoft’s (MSFT) case, using a discounted cash-flow model is the best tool for valuation, given the firm’s robust cash-flow characteristics. We outline below our forecasts and fair value estimate for Microsoft and offer up our model template to investors if they are interested in using it to value any operating (non-financial) company they wish. This model template can be found at DCF Valuation Model Template. Valuation Summary We think Microsoft’s shares are worth $35 each. We’re forecasting revenue expansion in the low-double-digits for fiscal 2011 … Read more