Microsoft Corporation Overview & iPod Rival Announcement
Microsoft is a software company that sells everything from desktop software to Xbox consoles, and now mp3 players. The software giant plans to release a rival product to the Apple iPod, Microsoft’s Zune digital player. This is the first bit of good news Microsoft had heard since Sony announced it would slash its price on the Sony PS3 in order to compete better with Microsoft. This announcement is one of many things that makes Microsoft stock very appealing in 2007.
Microsoft Stock Valuation
If you’re looking to buy Microsoft stock, its fundamentals and balance sheet are pretty solid. Microsoft Corp. is debt free, and currently holds 34 Million dollars in cash and short-term investments. A crisp clean balance sheet complements its mouth watering ROE and ROIC ratios of 28%. Microsoft’s Price-Earnings multiple is also approaching a 5-year low, which makes shares of Microsoft appear cheap.
Future Microsoft Stock Outlook
In the long term, Microsoft should maintain its competitive advantage on the PC Market with its industry leading software programs and applications. And when Microsoft decides to spit out another tech gadget that attracts our technological id, it has the FCF to do it. FCF (cash from operating activities minus capital expenditures) stands at nearly $13 billion dollars. That money will fuel R&D, and from looking at past products, Microsoft knows what to do with it.
Microsoft looks like a safe stock pick for an uncertain 4th quarter and FY 2007.