While it seems clear that Windows 8 is not going to be the immediate home run that many investors were looking for, I still haven't given up on Microsoft. The stock is down over 11% in the past two weeks. Microsoft is already a substantial position in my portfolio, but if it really goes into free fall I will look to add to the position. For those who might be interested, I present my analysis of the company and stock below.
****************************************************************************************************************
Company: Microsoft
Competitive Position:
Estimated "Reasonable" Owner Earnings.......................$25,571
(+) Interest and Other Income from Investments............$748
(-) Adjustment to Bring Cash Tax Rate to 35%............$2,974
(-) 5-Year Average Spending on Acquisitions..............$2,242
Estimated "Conservative" Owner Earnings.....................$21,103
I add interest and other income from investments here because in this conservative valuation I do not attribute any value to Microsoft's existing cash and investments. While I personally believe that at the proper time management will be open to making large distributions of excess cash, the opposite case can also be plausibly argued. It could also be argued that the company is too large and ownership is too concentrated for activists or other outside shareholders to force a change in capital allocation policy.
****************************************************************************************************************
Company: Microsoft
Ticker Symbol: MSFT
Exchange: NASDAQ
Industry: Software
Sector: Technology
Headquarters: Redmond, Washington
Fiscal Year End: June 30th
Date of Valuation: 11/18/2012
Name of Analyst: Pat Larkin
Market Cap: $223.351 billion
Market Cap: $223.351 billion
Current Price: $26.52
Estimated Value: $45.38
Thesis:
Microsoft common stock represents
an excellent value at its current price of $26.52/share. The stock has been
shunned by many investors because of its poor price performance since the tech
bubble of the late 1990's and because investors fear that changing trends in
the PC market will make the company's products obsolete. The stock's poor price
performance since 2000 is almost entirely due to its extreme overvaluation at
the beginning of the period and to the poor performance of the overall market
over that time frame. While the business of selling windows operating systems
for PCs likely faces a slow decline, it will continue to be a cash cow for the
foreseeable future. But the area where Microsoft is strongest is in the enterprise.
The company offers a very competitive product in almost every enterprise
computing niche, including a very strong cloud computing platform in Azure. The
switching costs faced by Microsoft's enterprise customers give the company a
very strong competitive advantage. This makes for a very safe projected future
cash flow stream that gives Microsoft investors a margin of safety at the
current price.
Business Description:
Microsoft was founded by Bill
Gates and Paul Allen in 1975 and went public in 1986. The company produces a
variety of software and hardware for both the enterprise and consumer markets.
In August of 2007, Microsoft paid
approximately $6 billion to purchase aQuantitative, a digital marketing and
advertising company. In the fourth quarter of fiscal 2012, Microsoft took a special charge of approximately $6.2 billion to write-down the value of
aQuantitative and other assets in its online services segment. In February of
2008, Microsoft offered to buy Yahoo for approximately $44.6 billion in cash
and stock, but the offer was turned down by Yahoo's board. In October of 2011,
Microsoft acquired Skype for $8.6 billion.
Microsoft is organized in five
segments: Windows and Windows Live, Server and Tools, Online Services,
Microsoft Business, and Entertainment and Devices. Table 1 provides a breakdown
of revenues, operating income, and operating margins for each segment and for the
entire company from 2010-2012. The Microsoft business division, which includes
the popular Office software, accounts for the largest portion of the firm's
revenues and operating income, followed by the Windows division and the Server
and Tools division. Entertainment and devices, which includes the Xbox game
console, is marginally profitable, while online services has been a money loser
to date. Operating income for both online services and for the overall company
were greatly depressed by the large write-off of the aQuantitative assets in
2012. Without the write-off, overall operating margins for 2012 would come
in at about 37.8%, roughly in line with prior years and with the 37.9% margin
achieved by competitor Oracle (ORCL) in fiscal 2012.
All segments experienced healthy revenue growth in 2012 except for the Windows and Windows Live segment. The lack of growth in this segment can be attributed to changes in consumer preferences away from PCs and laptops and toward tablets, to the weak global economy, particularly in Europe, and possibly also to customers putting off purchases in anticipation of the launch of Windows 8 in October of 2012.
| Table 1 - Microsoft Sales and Operating Income, 2010-2012 | |||||
| Growth | Growth | ||||
| Windows & Windows Live | 2012 | Rate | 2011 | Rate | 2010 |
| Revenue | $18,818 | 0.17% | $18,787 | -0.01% | $18,789 |
| Operating Income | $11,908 | -0.53% | $11,971 | -1.82% | $12,193 |
| Operating Margin | 63.28% | 63.72% | 64.89% | ||
| Server and Tools | |||||
| Revenue | $18,696 | 12.01% | $16,691 | 10.38% | $15,121 |
| Operating Income | $7,459 | 17.80% | $6,332 | 17.74% | $5,378 |
| Operating Margin | 39.90% | 37.94% | 35.57% | ||
| Online Services | |||||
| Revenue | $2,934 | 9.48% | $2,680 | 14.29% | $2,345 |
| Operating Income | ($8,122) | 206.61% | ($2,649) | 10.61% | ($2,395) |
| Operating Margin | -276.82% | -98.84% | -102.13% | ||
| Microsoft Business | |||||
| Revenue | $23,963 | 7.39% | $22,314 | 14.28% | $19,525 |
| Operating Income | $15,688 | 8.54% | $14,453 | 19.36% | $12,109 |
| Operating Margin | 65.47% | 64.77% | 62.02% | ||
| Entertainment and Devices | |||||
| Revenue | $9,585 | 7.75% | $8,896 | 45.00% | $6,135 |
| Operating Income | $365 | -71.79% | $1,294 | 146.48% | $525 |
| Operating Margin | 3.81% | 14.55% | 8.56% | ||
| Unallocated | |||||
| Revenue | ($273) | $575 | $569 | ||
| Operating Income | (5,535) | (4,240) | (3,712) | ||
| Operating Margin | |||||
| Total Revenue | $73,723 | 5.40% | $69,943 | 11.94% | $62,484 |
| Total Oper. Income | $21,763 | -19.87% | $27,161 | 12.71% | $24,098 |
| Operating Margin | 29.52% | 38.83% | 38.57% | ||
| source: Microsoft 2012 10-K | |||||
All segments experienced healthy revenue growth in 2012 except for the Windows and Windows Live segment. The lack of growth in this segment can be attributed to changes in consumer preferences away from PCs and laptops and toward tablets, to the weak global economy, particularly in Europe, and possibly also to customers putting off purchases in anticipation of the launch of Windows 8 in October of 2012.
Microsoft makes money on both a
transactional model and a licensing model. The transactional model involves
selling software licenses and other products in volume to enterprises and one
at a time to individual customers. The licensing model involves the sale of
multi-year licensing agreements to enterprises. A large portion of license
revenue, including about 80% of the business division revenue, is based on the
number of information employees in the organization and not on the number of
installed PCs. Licensing revenue has increased relative to transactions revenue
in recent years. Licensing revenue results in a great deal of up front revenue
to the company that must be deferred for financial reporting purposes.
Microsoft gets slightly more than
half of its sales from the United States. No other single country makes up more
than 10% of the company's sales.
Competitive Position:
Microsoft benefits from customer
captivity due to network effects and switching costs, which allows them to
charge more for their products than they could in a more competitive
environment. A simple example of both network effects and switching costs is
the existence of millions of Microsoft Word, Excel, and PowerPoint files that
are viewed as substantial assets by the individuals and businesses that created
them. It is costly and risky to attempt to switch these files to a different
format, even when it is possible to do so. The fact that so many established
professionals and companies are committed to these programs creates a network
that is worth paying to enter or to stay in. For example, students and young
professionals will want to be able to read the files sent to them by
instructors and managers, so they will find it worthwhile to invest in the
Microsoft Office suite.
Microsoft's moat is strongest in
the enterprise. This strength consists of much more than Office. Microsoft
Server and the Exchange e-mail platform are well entrenched market leaders and
the company has strong offerings in most other critical enterprise
applications. For many large enterprises, IT is a potential vulnerability, not
a profit center. An IT director is in some ways like an Umpire in baseball:
unlikely to attract much attention unless he commits a major gaff. Taking risks
has little upside for the IT manager, so he is likely to stick with established
providers like Microsoft for a range of enterprise solutions, even if the cost
is high relative to other options.
The server and tools division
continues to grow rapidly and achieve high profitability. Microsoft was an
early mover in cloud computing with Azure. Azure has the potential to provide
the same degree of customer captivity that Microsoft has enjoyed with Windows.
No one can be certain how public cloud computing is going to develop. In the
event that the cloud never reaches its full potential for security, privacy, or other
reasons, few if any large technology companies are as well positioned as
Microsoft to pivot back to on-site solutions as deftly as Microsoft. Microsoft
is beginning to recognize the potential in creating private clouds and
integrating them with Azure. This makes the company the best choice for
enterprises that are cautious about making a full commitment to the public
cloud.
Microsoft faces formidable
competition in its Server and Tools, Online Services, and Entertainment and
Devices Divisions. In server and tools, in addition to open source, IBM and
Oracle provide strong competition. However, the switching costs involved and
the very large size of the market make it possible for several highly
profitable firms to coexist in this space.
In Online Services, Google is
dominant. While Microsoft has a comparable technology in Bing, this is a
business where the network effect dominates. One strategy that the firm has
contemplated to improve results in this area is partnering with Facebook (FB). While it remains questionable
whether this segment will ever yield high returns on the capital invested in
it, shareholders can at least hope that fact that the company has already incurred
the enormous startup costs to establish a foothold in online services will
dampen future losses.
In entertainment and devices,
Microsoft's Xbox had a 49% market share in the first quarter of fiscal 2013 in a
very competitive and difficult business. It's Kinect motion sensing device
gives Xbox an edge on competing consoles. The technology that Kinect is based
on might also enhance Microsoft's drive to dominate the "smart house"
of the future.
Apple and Google are both
formidable competitors in smart phones and tablets. Microsoft pursues a dual
strategy of licensing its operating system to other manufactures of phones and
tablets and producing its own devices. In October of 2012, the company released
the Surface tablet along with its new Windows 8 operating system. The Surface
comes with a keyboard and can be folded up and used like a tablet or unfolded
and used like a laptop. The first version runs on the Windows RT operating
system that is compatible with the energy saving ARM chip architecture, while a
new version to be released later in 2012 will run on an Intel Chip. Microsoft
hopes to find a niche for the surface among customers who need a productivity
tool that can run Office and other applications and want the fun and
portability of a tablet. Some reviewers of the Surface are concerned that the
two different versions will confuse customers, and initial sales seem to be modest. However, Microsoft appears to be attempting to create an
environment where developers can create software and apps that will work on
PCs, laptops, tablets, phones, and potentially other devices with differing
hardware. If successful, this strategy could become a self-reinforcing success,
much like Microsoft has long enjoyed in PC operating systems.
The biggest strategic threat
faced by Microsoft is an acceleration in the decline of PCs and its Windows
franchise. As mentioned earlier, the decline in PC sales in the first quarter
of 2013 was driven by the weak European and global economy and also
probably by the coming launch of Windows 8. Many of Microsoft's partners are
set to launch an array of attractive new Windows based products such as Ultra
books. Still, the possibility of a continued steep decline in sales of Windows computers
to consumers is real. On the enterprise side however, the main threat to
Windows and Office seems to be a quick movement to the cloud, where Microsoft
has already established itself as one of the leading players.
Valuation:
Microsoft has the proverbial
"fortress balance sheet," with $66.644 billion in cash and
investments versus $11.950 billion in negotiated debt at the end of fiscal
quarter one, 2013. The firm has astronomical coverage ratios and a rare AAA
bond rating. The fact that the company has any debt at all is probably due to
the fact that a large fraction of Microsoft's cash is parked overseas and would
be subject to higher tax rates if brought back into the United States to pay
dividends or repurchase stock. With interest rates at record low levels, the
company prefers to borrow to fund some cash needs while waiting for the
possibility of a tax holiday that would allow them to repatriate their foreign
cash without a tax penalty. According to data from Standard and Poor's, the
five-year cumulative probability of default for a AAA rated issuer is 0.44%.
Due to their proverbial "enormous cash hoard" and very healthy cash
flows, I estimate that the probability of the company facing financial distress
in the next five years is essentially zero.
I will present two scenarios for
a discounted cash flow valuation of Microsoft stock. The first scenario is
reasonable but not aggressive while the second scenario is extremely
conservative. In both scenarios I work with real estimated cash flows and a real
discount rate. I add the current 10-year inflation protected U.S. treasury bond
yield of -0.73% to the estimated market implied equity risk premium of 6.01%
obtained from professor Aswath Damodaran's website to arrive at an estimated
real discount rate of 5.28%. However, being a conservative investor I have a policy of always
using a real discount rate of at least 7%, which is just above the long-run
average real return earned by the U.S. market.
In my "reasonable"
scenario I will value Microsoft's stock using a two-stage free cash flow to
equity (FCFE) model with zero real growth in the second stage:
(1) FCFE = Owner Earnings - (1- D/I)*(GCAPX + ΔNC NWC)
Equation (1) says that the cash
available to pay out to equity holders in a given period is equal to what the
company earns minus what it invests in new fixed and current assets minus the
portion of new investment that is financed with new debt. Owner Earnings
represents the amount of cash that could be taken out of the company without
impairing its competitive position or reducing unit volume. The owner earnings
calculation involves making a number of adjustments, including adding back
depreciation and subtracting MCAPX, or maintenance capital expenditures, the
capital expenditures required to maintain owner earnings. D/I is the portion of new investment that will be financed with debt. GCAPX is capital expenditures for growth,
which is equal to total CAPX minus MCAPX. I include acquisitions with GCAPX.
ΔNC NWC is the change in spontaneous non-cash net working capital. Short-term
debt is not included because it is interest bearing and is classified as
negotiated debt. In addition to these variables, the two-stage FCFE model
requires estimates of the real growth rate in the first stage, the length of
the first stage, and the equity investment rate. The equity investment rate is
equal to equity investment, the second term in equation (1) above, divided by
owner earnings, the first term.
There are a variety of approaches
to estimating a company's normalized owner earnings. In my judgment, it is
reasonable and conservative to estimate Microsoft's normal owner earnings using
data from the trailing four quarters. Microsoft bulls might argue that the
preceding year was a slow year for the global economy, but it clearly wasn't a
recession year. I begin with Microsoft's trailing twelve month (ttm) cash flow
from operations and make the following adjustments (all dollar figures are in
millions):
Cash flow from Operations.........................................$31,617
(-) Maintenance CAPX..............................................$2,472
(+) NC NWC Investment...........................................$537
(-) Interest and Other Income from Investments..........$748
(-) Stock-Based Compensation..................................$2,289
Estimated Owner Earnings..........................................$25,571
Cash flow from Operations.........................................$31,617
(-) Maintenance CAPX..............................................$2,472
(+) NC NWC Investment...........................................$537
(-) Interest and Other Income from Investments..........$748
(-) Stock-Based Compensation..................................$2,289
Estimated Owner Earnings..........................................$25,571
Note that I ignore that large
charge-off in the fourth quarter of 2012 because I am interested in estimating
normal owner earnings going forward. Beginning with cash
flow from operations also counts deferred
revenues, but not revenues from sales made in prior years and recognized in the
current year, in owner earnings. I don't have any problem with this because
the early receipt of licensing revenues should be a benefit enjoyed by
Microsoft in perpetuity. Income from investments is removed because I follow
the common practice of valuing cash and investments separately. I use the
conservative assumption that all CAPX for the year is MCAPX. While I focus on cash, I use the accounting
estimate of stock-based compensation because dilution associated with
stock-based compensation is likely to remain a real cost to shareholders in the
future and I don't know of a superior way to account for it. Other factors that
one might consider in estimating owner earnings in this way that are not
relevant to the current valuation include preferred dividends, minority
interests, extraordinary items, and discontinued operations. Some of these
depend on what measure of net income is reconciled to cash flow from operations
in the cash flow statement.
From year end 2007 through
year-end 2012 Microsoft invested 24.5% of its estimated owner earnings in
future growth. This includes CAPX, Acquisitions, and investment in non-cash net
working capital. As I believe that Microsoft's use of debt is driven by record
low-interest rates and tax factors related to its foreign cash holdings, I
assume that the company's target debt to capital ratio is 0% and that all
future investment will be funded by equity holders. Counting GCAPX in investment is
technically double counting when all GCAPX has already been subtracted from
owner earnings. This doesn't bother me too much, as I am more concerned with
underestimating the amount of investment that will be required to sustain
future growth than I am with overestimating it.
Microsoft's real sales growth
over the trailing five recession plagued years has been a bit above 5%. I
conservatively assume that Microsoft will be able to grow at a real rate of 3%
over the next 10 years. These assumptions result in the free cash flows and
present values presented in Table 2 below.
Table 2: Free Cash Flow Valuation of Microsoft Operations
Year
|
Owner Earnings
|
Investment
|
FCFE
|
PV FCFE
|
1
|
$26,990.191
|
$6,612.695
|
$20,377.495
|
$19,044.388
|
2
|
$27,799.896
|
$6,811.076
|
$20,988.820
|
$18,332.448
|
3
|
$28,633.893
|
$7,015.408
|
$21,618.485
|
$17,647.123
|
4
|
$29,492.910
|
$7,225.871
|
$22,267.039
|
$16,987.418
|
5
|
$30,377.697
|
$7,442.647
|
$22,935.050
|
$16,352.374
|
6
|
$31,289.028
|
$7,665.926
|
$23,623.102
|
$15,741.070
|
7
|
$32,227.699
|
$7,895.904
|
$24,331.795
|
$15,152.619
|
8
|
$33,194.530
|
$8,132.781
|
$25,061.749
|
$14,586.166
|
9
|
$34,190.366
|
$8,376.765
|
$25,813.601
|
$14,040.889
|
10
|
$35,216.077
|
$8,628.067
|
$26,588.009
|
$13,515.996
|
11 and After
|
$36,272.559
|
$0.000
|
$36,272.559
|
$263,416.139
|
Summing the present values
results in a value of $424.817 billion for Microsoft's operations. If we divide
the first year's owner earnings by our 7% real discount rate we find that
$385.574 billion of this value comes from the firm's earning power value (EPV).
The remaining $39.243 billion represents the net present value of growth
opportunities.
Approximately $58 billion of
Microsoft's cash and investments were held abroad as of year-end 2012. I give
this amount a 20% haircut to reflect the difference between the U.S. statutory
corporate tax rate and the substantially lower rates that prevail in Ireland
and other domiciles where the cash is held. This leaves $55.044 billion in cash
and investments. Microsoft has no defined benefit pension plan, and I am unable
to identify any other significant balance sheet adjustments that need to be
made to the valuation. Adding the adjusted cash and investments to the value of
operations then brings the total estimated value of the common equity to $479.861
billion.
Microsoft had 8.422 billion
shares of common stock outstanding at the end of the first quarter of fiscal
2013. The company also had 248 million shares of unvested restricted stock and
22 million stock options outstanding. I add these additional potential shares
to the existing share count to arrive at a fully diluted common share count of
8.692 billion shares. I should note that this is not considered a sound
practice in terms of valuation theory. The textbook solution is to attempt to value the
options and restricted shares using an asset pricing model. However, given the
information that is commonly available to outside investors, all available
approaches to dealing with options and other contingent claims have serious
drawbacks. As I am looking for a conservative valuation and I am comfortable
with simply adding the additional potential shares to the share count in most
valuations. Dividing the estimated equity
value by the adjusted share count gives an estimated going concern value of
$55.21 per share for Microsoft.
Since my conservative scenario
assumes zero real growth, FCFE will be equal to owner earnings. One of the
subtle challenges in many valuations is separating outlays that are truly
intended to grow the business from outlays that are necessary to merely
maintain the business in its current condition. In my conservative valuation I
assume that essentially all outlays are expenses and not investment. To arrive
at my conservative estimate of FCFE, I begin with my "reasonable"
estimate and make the following adjustments:
Estimated "Reasonable" Owner Earnings.......................$25,571
(+) Interest and Other Income from Investments............$748
(-) Adjustment to Bring Cash Tax Rate to 35%............$2,974
(-) 5-Year Average Spending on Acquisitions..............$2,242
Estimated "Conservative" Owner Earnings.....................$21,103
I add interest and other income from investments here because in this conservative valuation I do not attribute any value to Microsoft's existing cash and investments. While I personally believe that at the proper time management will be open to making large distributions of excess cash, the opposite case can also be plausibly argued. It could also be argued that the company is too large and ownership is too concentrated for activists or other outside shareholders to force a change in capital allocation policy.
I estimate Microsoft's cash tax
rate for the prior year to be just over 20%, so I adjust for the possibility
that cash tax rates could resemble the current U.S. statutory rate of 35% going
forward. I estimate that the company had even higher cash tax rates in some
years in the late 1990's and early 2000's. While I think that it is much more
likely that the either the firm will continue to be able to keep its tax bill
lower or the U.S. corporate tax rate itself will be lowered, it seems appropriate
to use the statutory rate in a very conservative valuation of the stock.
I subtract the average amount
spent on acquisitions by Microsoft in the past five years to reflect the
possibility that the company will continue to make money-losing acquisitions.
Some of these acquisitions might serve the purpose of protecting some of the
firm's existing franchises, but in that case they are more like MCAPX than
investments for growth.
Since owner earnings are equal to
FCFE in a zero growth model, we can capitalize the conservative owner earnings
at the real discount rate of 7% and divide by the adjusted share count to
obtain an estimated intrinsic value of $35.54 per share. If we put equal weight
on the reasonable and conservative valuations, we get an estimated value of
$45.38, which is my point estimate of the current intrinsic value of MSFT
common stock.
Adjusting for write-offs,
Microsoft currently has a trailing P/E ratio of about 10.19, not too far above
is all-time year-end low of 9.70. Competitors Oracle (ORCL) and Google (GOOG)
have P/Es of 14.90 and 20.28, respectively. Going back to 1998, I estimate
Microsoft's median P/E at 21.50. At my estimated fair value of $45.38,
Microsoft's P/E would be 17.45. The firm's price to sales and price to book
ratios are also significantly below their long-term medians.
Given it's size, profitability,
and emphasis on software and the enterprise, in my judgment Oracle is the
closest comparable firm to Microsoft. Applying Oracle's current P/E of 14.90 to
my estimated owner earnings per share of $2.94
in my "reasonable" FCFE valuation ($25.571/8.692) yields an
estimated value of $43.81 per share. Using the extremely conservative FCFE
valuation suggest a value of about $37.33 per share. Overall, these rough
estimates support the discounted cash flow (DCF) valuation presented above.
Capital Allocation and
Governance:
Microsoft pays a quarterly
dividend of $0.23 a share, which translates into a yield of 3.46% at the
current stock price. The company has a long track record of repurchasing stock,
though repurchases were substantially lower in fiscal 2012 than in prior years.
Microsoft has shown a tendency to make large "strategic" acquisitions
that haven't always paid off, though one could argue that the jury is still out
on last year's Skype acquisition.
Microsoft has one class of common
stock. To their credit, they only grant stock options for use in acquisitions.
Incentive compensation typically consists of restricted stock. As of the end of
fiscal 2012, co-founder and Chairman Bill Gates owned 5.47% of the company and
CEO Steve Ballmer owned 3.95%. Stock holdings for all board members and
executives totals 9.46%. Gates, for many years the world's richest private citizen, sells
large blocks of stock on a regularly scheduled basis for the purpose of
diversifying his portfolio. With his MSFT stock holdings down to about 21% of
his $66 billion net worth (according to Forbes) perhaps he will slow down the
pace of selling in the near future.
There's not much to say about
Ballmer's management that hasn't been said already. He has been accused of
being closed minded. According to rumors, he doesn't let his children use
Google search or own Apple products. The company recently pushed out Steven
Sinofsky, the long-time head of the Windows division who many observers thought
might be the heir apparent to Ballmer. According to rumors, Ballmer wants to speed up the product development cycle at Microsoft and Sinofsky was viewed as an obstacle to achieving that objective.
Ballmer is
incredibly driven and committed to returning Microsoft to its former glory. I
tend to think that with access to Gate's counsel Ballmer will do a better job
at running this complex company going forward than any likely replacement
(other than possibly Gates himself) would do. My biggest concern is that it
only takes one huge mistake in capital allocation to undo several years of
strong operating performance.
Risks:
-As mentioned above, the decline
in PC sales and Windows could happen more quickly than anticipated. In my view
the firm has a coherent strategy to deal with this eventuality, though it is
unlikely that all lost cash flows from a Windows collapse could be replaced.
-The firm could make one or more
ill-advised large acquisitions. A Facebook (FB) acquisition, for example, could
be a shareholder killer.
Catalysts:
-The company's strategy of
linking multiple platforms and devices to Windows 8 could succeed and pave the
way for sustainable competitive advantages and large economic profits in a
range of markets.
-More developing countries could
start to pay for Microsoft software as they integrate into the global economy.
-A tax repatriation holiday or
reduction in the corporate tax rate could free up cash for large scale share
repurchases.
-Microsoft spent almost $10
billion dollars on research and development in the last year and some of the
smartest people in the world work at its campus in Redmond. Something good
could come of this.
Disclosure: I am long Microsoft common stock. Positions may change at any time without notice.
******************************************************************************************************************
I am an individual investor who occasionally shares opinions about investments and other matters on the internet. I am not a registered investment adviser or investment adviser representative. I did pass the series 65 exam in 2011, but I have never been registered as an investment adviser or investment adviser representative in any jurisdiction. I will not respond to any inquiries about investment management services. Nothing posted on this blog should be interpreted as actionable investment advice, financial planning advice, tax advice, or legal advice. I do not derive or seek to derive any income from my blogging activities. This blog is intended solely for the entertainment of the reader, and the author.
******************************************************************************************************************
I am an individual investor who occasionally shares opinions about investments and other matters on the internet. I am not a registered investment adviser or investment adviser representative. I did pass the series 65 exam in 2011, but I have never been registered as an investment adviser or investment adviser representative in any jurisdiction. I will not respond to any inquiries about investment management services. Nothing posted on this blog should be interpreted as actionable investment advice, financial planning advice, tax advice, or legal advice. I do not derive or seek to derive any income from my blogging activities. This blog is intended solely for the entertainment of the reader, and the author.
