2012, on the other hand, has started off with a bang, and brought some long-awaited stock price appreciation for patient investors. In the first week of the New Year, the S&P and Dow gained 1.6% and 1.2%, respectively, compared to a jump of more than 8% in MSFT.
One possible explanation is a change in analyst perception, with Credit Suisse issuing a report with a positive outlook for the future of Microsoft’s partnership in mobile with Nokia. "We fundamentally believe that Nokia's focus on Windows will allow [Nokia] to drive a recovery through 2012 in both its top-line and earnings," Credit Suisse wireless analyst Kulbinder Garcha wrote in a note to clients, including an upgrade for Nokia. As expected, Nokia & Microsoft have plans to invest significant amounts of cash in promoting the new phones ($200 million), with payments to sales rep expected to start mitigating the promotion of Android and Apple products.
With 2012 upon us, the catalysts for appreciation in Microsoft’s share price are abundant: the release of Windows 8, the potential to gain share in mobile, the continue drive in Bing share gains, and the possible retirement of Steve Ballmer after the release of Windows 8 (as has been rumored); for Microsoft investors, the first week of trading was hopefully just a preview of a successful year ahead.
About the author:I'm a value investor, with a focus on patience; I look to buy great companies that are suffering from short term issues, and hope to load up when these opportunities present themselves. As this would suggest, I run a fairly concentrated portfolio by most standards, usually with 8-10 names; from the perspective of a businessman rather than a market participant / stock trader, I believe this is more than sufficient diversification.
I hope to own a collection of great businesses; to ever sell one, I would demand a substantial premium to the average market valuation due to what I believe are the understated benefits to the long term investor of superior fundamentals and time on intrinsic value. I don't have a target when I purchase a stock; my goal is to replicate the underlying returns of the business in question - which if I've done my job properly, should be very attractive over a period of many years.