Thursday, February 09, 2012

MSFT hits 52 week high

Microsoft has finally begun to get some credit for the number of successful business lines it has.

Not only does it have the annuity-like Windows and Office products, it has claimed #1 in gaming, and has reached a near perfect margin on online search.  This last bit is one of the areas the company has invested in massively, only to continuously lose money.  However, with increasing share of a growing business, MSFT may finally be able to break even on an operating basis sometime in 2013 - there is light at the end of the tunnel.

The biggest value factors, however, are the options on Windows 8 and the new Windows Phone platforms.

My own view is that the stock is worth about $34 per share, excluding the value of the Windows Phone option, and if everything works well, the stock could fetch $40.  There is ample room to raise the dividend and buybacks are good for investors at anything up to $30, because of the low valuation.

The big concern one has to have is the massive resistance in the chart from here.  Since 2000, the best strategy in MSFT was to sell whenever the stock hit $30.  It did make a brief run to $35 in 2008, and might make it there again, but further priec appreciate will be difficult to capture.

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