Sunday, March 15, 2009

Bullish case for Microsoft.

Microsoft (MSFT) is the largest technology companies around the world. Is it right time for investing? By calculating the intrinsic value of shares clearly yes. On what business the company is and what its profits come in the future?

Let's focus on the structure of the business. Activities are divided into the following divisions:

1) Client
Under Client divisions located operating systems. The operating system Vista, which is now a source of income, there is either the standard version, or in the Premium Edition, such as Vista Business or Vista Ultimate. In 2008 it had been sold 180 million licenses for operating systems of MSFT.

In 2009, MSFT expects greater demand for operating systems within the retail clients than in the business sector. Particularly the growing number of PC users in emerging markets.

2) Server and Tools
This division focuses primarily on the sale of licensed software for computer servers and networks. It is on Windows Server and Microsoft SQL Server. Under this division are also still activity, which is hiding the title of Microsoft Consulting Services. In 2009 it is expected that sales will increase due to release new versions of Windows Server, Microsoft Visual Studio and Microsoft SQL Server

3) Online Services and Business
This is not for Microsoft as well as others. This division contains operation from portals MSN and Live Search. Mainly unsuccessful acquisition of Yahoo! brought a lot of discussion. The annual report on the potential acquisition has this comment: "After careful consideration we concluded that the price requested by Yahoo! was contrary to the interests of shareholders MSFT. We have offered several other suggestions on how to join the Yahoo! or engage in joint co-operation, but all these proposals have been Yahoo! rejected. After this unsuccessful acquisition still looking for other ways, whether through their own invention, an acquisition or other form of partnership as an important way to enter into this business. "

4) Microsoft Business Division
This division is responsible for Microsoft Office Systems and Microsoft Dynamics Business Solutions. Microsoft Office make up more than 90% of this income group. Microsoft Office 2007 licenses are sold very decently (the year of sales growth of 21%). Slight decrease (-2%) has seen sales of Microsoft Dynamics. At present it is the most critical division of Microsoft.

5) Entertainment and Devices Division
This is again the most dynamic group of all. Development of the Xbox 360 and the development of computer games and video games for Xbox are activities of this group. In recent years, MSFT has invested large sums in this division and the profitability has slowly turned on its side. Competition Playstation is not already as much ahead as in the past. In addition, successes celebrated and sales of computer games from Microsoft, there is very big problem with piracy.

Financial analysis for Microsoft

In view of this table shows that Microsoft, despite the global recession is able to increase its revenue and profit. Profit over 17 billion USD and it is extremely necessary to say that deserves recognition. Little deterrent factor for the shareholders is certainly pay ratio, which currently reaches 24%. This is a little meanness from MSFT, but the segment still can talk about the growing industry. Therefore, I would even MSFT considered a type of so-called growth shares.

The good news is that Microsoft was able to use this five-year period to maintain a faster growth rate of profit to revenue growth. Moreover, the growth rate of profits in terms of the geometric average is interesting to 21%.

Cash by MSFT now holds, is far from such, as had five years ago. Then hold incredible 60 billion USD, which is now something unimaginable. And the 23 billion USD in total gives respect. Business debts are also total in check, so from this perspective seems to be everything allright.

Fundamental analysis for Microsoft


2 Responses to "Bullish case for Microsoft."

stock-in-sin said... March 21, 2009 at 2:15 AM

Look like interesting info here...keep it on =)

Vlada, Czech Republic said... March 22, 2009 at 9:25 PM

thank you