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Microsoft Corporation Message Board

  • bengrahamman bengrahamman Dec 5, 2012 2:14 PM Flag

    My MSFT Investment Thesis

    November 15, 2012 (26.77) Thesis

    Microsoft has a AAA balance sheet. Close to $8 per share of cash as of 9/30/12. Free Cash Flow and earnings are both of high quality, and I believe both to be stable at a minimum. P/E ratio is 9.39X, based on our projected F2013 earnings of $2.71 per share. Dividend yield is 2.6%. We project the dividend payout ratio to be a healthy and conservative 30%. I don't see them being replaced in enterprise. Trying to "kill this investment," and I can't. I just don't see the degradation of the company that so many others discuss (see yearly comparisons below). My favorite part of the investment thesis is the current price. Of course, could go lower, a lot lower, but that is the way investing is. I think many think that revenues have not been increasing, or are in decline. Maybe the stock price catalyst would be the understanding of the simple math, and seeing that revenues, contrary to popular perception have been on the rise for a decade + (not including F2009 where there was a decline.) Projected investment returns for 15 years are estimated at 15% to 22% annualized based on current price. Waiting to hear about penetration of Surface. Windows 8 projected to be slow but steady penetration, similar to Windows 7.

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