Since being added to the Dow Jones Industrial Average shares of Microsoft (MSFT) have lost somewhere in the neighborhood of 20% including dividends. That makes almost 14 years of virtually dead money for investors in what is still the largest software company in the world.
With Mr. Softie trading at a market multiple and carrying a greater than 3% dividend yield, the stock seems like a diamond in the rough. But then the same could have been said for the last decade. After all this time it's hard to find anyone except Steve Ballmer or a few software analysts who can recommend Microsoft stock with a straight face.
Breakout found one of the few intrepid bulls in Brian Sozzi of NBG Productions. In the attached clip Sozzi lays out three reasons he wants to own Microsoft right here, right now.
1) The Surface
Sozzi's done his channel checks and found the Surface in short supply. He generously takes that as evidence of exceptional demand. Whatever the cause, Sozzi thinks the potential success of the tablet is being underestimated.
Also in the hardware category is the latest Xbox expected for the holidays. Sozzi envisions rocking Microsoft stores with kids playing Xbox demos while mom and dad consider the Surface.
2) CFO Spending is increasing
For all its success in games and failures in other hardware, Microsoft is an enterprise software company. When corporations started tightening their belts after the financial crisis Microsoft took a hit. Now that spending is coming back and balance sheets are laden with cash, Sozzi thinks Microsoft will see strong sales for its Windows products.
3) Share Buybacks
Sozzi likes buybacks. In the interest of fair disclosure I personally think they're a monumental waste of money but I'm in the minority with that view.
Regardless Microsoft's share buyback program expires in September and Sozzi thinks it will be replaced with a cash giveback that's more aggressive than anything seen out of Redmond, including the one time Special Dividend a few years back.
"I can see a major cash giveaway on Microsoft coming very soon that no one expects," he says in his closing statement.
The battle lines are drawn and it's Sozzi against the world. We want to know what you think: is Microsoft a buy or is it doomed to spend eternity somewhere in the high 20's?