The Microsoft Case

I feel the need to start writing about MSFT after reading so many bad intentioned articles on the web like (as expected written on Business Insider one more time).

Regarding my experience with MSFT I have been following this stock for a year and a half almost every day. I have profited from it using stocks and options. I lost money with it one time, but that was half my fault and half due to the wave of pessimistic stories that started to be written in October about the “Death of the PC”.

Much of the gloommy atmosphere is related with modest Surfaces sales. Im certainly not worried about that. With current Margins and Surface price, its pretty obvious the device was priced not to lose money and tu advertise W8. So even if there’s been low demand for the Surface, the “high” price and quick cut in orders to suppliers is keeping the company from futures write-offs (losses).

I also think Surface Pro will sell really well. Who wouldn’t spend $1000 for a laptop and a PC bundled together instead of a price of $1700 for an Ipad and a low- end Mac air (comparable products in functionality).

Besides MSFT’s valuations at this point (dirty cheap), i keep believing in the company because of Bill Gates as its Chairman. I have the feeling he wont let things get screwed.

MSFT was forced to take a huge risk with W8 in order to grab some share of the Tablet and Mobile market offsetting some of the licking in OS sells to PCs.

I’d rather see a hungry and competitive Company than a fearful Company just trying not to lose market share in their only segment as DELL or IBM.

MSFT is a brilliantly diversified business, with revenues coming from Office, Windows, Enterprise, Xboxs and hopefully in the near future from Phones, Skype, Hardware devices.

My DCF valuation tells me MSFT is being valued today as if it were going to shrink earnings by 7% yearly in the future. My conservative Fair Value for the stock is 36, which is in line with what analysts think.


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