Microsoft (MSFT) has finally seen some ray of hope after a continuous dismal performance. The stock price of Microsoft has finally hit $40 after a long time. Microsoft's stock price has risen just about 18 percent. This comes after 14 long years and the last time the stocks were priced at $40 was way back in 2000.
Even since Ballmer’s retirement in August, the company has seen its stocks on a rise. The S&P 500 index, for that matter, has risen about 13 percent since. Microsoft's stock price closed the week above $40 per share. What helped Microsoft establish a formidable position in the market were two of its greatest innovations in the last millennium. The first was Windows operating system. Ever since inception, the OS has dominated the scene and has generated bulks of cash for the company.
Well, the other product that I’m going to name isn’t a personal favorite but going by the records, another major product that changed the game for Microsoft was the snail-slow Internet Explorer browser. These two advancements got Microsoft the position it is still in today. And, it produced a return on equity for the company that exceeded 15 percent for well over a decade. Microsoft had led the revolution while creating a web browser. The whole concept was new and people were awe struck by the whole idea. Now, several years down the line, no one bothers about Explorer in spite of having the fast versions such as I8. This can be owed to the hugely successful alternatives like Firefox and Chrome. Microsoft came out with a bang but lost its fizz midway. Something which was a first in market was expected to only get better with time. That Microsoft led the innovation is true but that it lags behind many such brands is the bitter truth.
- Warning! GuruFocus has detected 9 Warning Signs with MSFT. Click here to check it out.
- MSFT 15-Year Financial Data
- The intrinsic value of MSFT
- Peter Lynch Chart of MSFT
Over the years the company has seen highs and lows in stocks. What the company needs to do in order to keep the price trend upwards is to keep going for share repurchases. This way the company can manage to provide above-average returns. Otherwise it would be left to the management to take care of the returns that are provided. What the analysts also suggest as a solution is that by acquiring other companies in same line of business can help solve of the issues. At least, the dividend will be taken care of if not everything.
Now with a new management team in place the company already seems to have a target in sight. What Satya Nadella and his team must focus on is to take the investor community through a reality check. What immediately needs to be done is to take the buyback underway. What has always been a problem with the MSFT management team is delayed action. They seem to wait the storm out instead of taking an early action to be safe.
The stock market is judged and governed by the market forces. It’s not in the hands of a single person to control the goings of the market. The company together with its boss can only take right decisions at the right time to affect the outcomes. For the record, being priced at $40 a share, MSFT proves to be a decent investment.