microsoft

Market Monday 1-24-2022

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Hey, Boys and Girls, here comes an interesting week for investors. The following article is for informational purposes only and is not investment advice. This is not a recommendation to buy or sell securities. As always, the best investment strategy for long-term investing is building a well-diversified portfolio based upon your time frame and risk tolerance and then leaving it alone except for annual or semi-annual rebalancing. But… Short-Term Investing January 2022 The week of January 24, 2022 looks fun. And by fun, I mean interesting. The Fed meets on Wednesday. Everyone expects it to raise interest rates to help tame inflation, while also reducing its bond buying to do the same thing. If that weren’t enough, a bunch of big companies are set to report their earnings this week including Apple, Microsoft, and McDonalds. At least we don’t have to worry about options expiring, that was last week. As I write this, the S&P 500 hit the 10% down mark necessary to call the move from January 3 to now a correction. Remember a correction is a 10% reduction, although most people will require the market to close beneath that level to call it a recession. A 20% reduction …

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Is FAANG a Good Investment?

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Even if you’ve never heard of FAANG, chances are you have heard of all the stock components and maybe even contemplated an investment in one or more members, but is FAANG a good investment or bad investment? What Is FAANG? Let’s start from the beginning. FAANG stands for Facebook, Apple, Amazon, Netflix and Google. As you can probably tell, these are very big, very well known, technology stocks. They are also frequent investments among investors who only invest in a few individual stocks, people often called Main Street investors (as opposed to Wall Street investors). One omission from the list is Microsoft, which is also a very large, very well known, technology company. Unlike the others, however, Microsoft’s stock is not well loved by Wall Street investors and analysts, in large part due to its sideways performance from 2002 to 2013. While its stock has recently done well, it still doesn’t have the same shine, or flair as the others. Perhaps this makes it a less “noisy” investment with fewer fair-weather, amateur, investors? That’s an article for another day. For professional stock analysts and investors, FAANG represents a quick look at the “new” titans of American business. Each of these …

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Microsoft’s LinkedIn Mistake

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There is an interesting post over at Mashable about the failure of Tumblr to make any progress in righting the ship at Yahoo. The author makes the argument that Yahoo, and Marissa Meyer, somehow “derailed” Tumblr, when the reality is that Tumblr was a money burning machine about to go bankrupt without yet another infusion of financing when Yahoo rode to the “rescue” with a billion dollar buyout offer. Most analysts expect Yahoo to write off every single dollar related to the acquisition. In other words, it was a billion dollar waste of money. Microsoft’s $26 Billion Blunder This brings us to this week’s stunning blunder by Microsoft. The company announced that it would pay $26 billion to acquire LinkedIn. LinkedIn, like Tumblr, does not make a profit, though it isn’t teetering on the verge of shutdown. LinkedIn, like Tumblr, has a very specific user base that has peaked. The company reported a $66 million loss for last quarter, and a loss of $166 million for 2015. In other words, Microsoft just paid billions of dollars for a company that will cost it hundreds of millions of dollars. The truly bizarre part of this acquisition is that Microsoft’s current CEO, came on …

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Windows 10 and Microsoft’s Earnings

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I don’t usually do a lot of analysis of company moves. I just don’t have the time, and often don’t have the insight. But, as a freelance technology writer, I spend a lot of time looking at technology and technology companies. Microsoft is rolling out its new operating system called Windows 10, and it has some interesting marketing and PR behind it. Free Windows 10 Upgrade The first interesting thing about Windows 10 is that it is free. Well…. kind of… and sort of. If you already own Windows 7  or Windows 8, Microsoft will allow you to upgrade to Windows 10 for free, for up to one year. That is, you have one year from now to upgrade to Windows 10 and get it for free. Free? How does this make sense for a publicly traded, profit motivated company? The first thing to understand is that most customers don’t actually upgrade their operating system when new operating systems come out. For retail customers (that is, people who have their own computers that they use and set up themselves) the process of upgrading an operating system is complicated, and unnecessary. After all, if your computer works now, why bother doing …

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Tech Earnings and Stock Market Moves

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The U.S. stock market is composed of thousands of stocks. Of course, when it comes to moving the overall market, some stocks matter more than others. The biggest stocks, those in the S&P 500, and those in the Fortune 500, have some of the biggest impacts on the overall stock indexes. However, in most cases, the news that comes out of those companies is relatively expected. The exception to this rule are the technology companies. Unlike, say oil companies, or big manufacturing companies, it isn’t always easy to use the economic information surrounding them to accurately predict what will happen, especially when it comes to earnings reports. And, with those same companies forgoing the usual “guidance” that other companies provide, what happens in tech company earnings can be a true market moving surprise. This week saw a negative report from industry titan IBM. IBM is not only a household name technology company, but it is also the second highest weighted component in the Dow Jones Industrial Average, commonly referred to as The Dow. The company itself is down over 5 percent so far today, and the Dow is down over 1 percent, or more than 150 points. (Also dragging on …

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Microsoft Layoffs About Nokia and New CEO

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Microsoft recently announced a big round of layoffs. According to reports, this is Microsoft’s biggest round of layoffs ever, at nearly 18,000 employees, all within the next year. Often, layoffs are all about Wall Street, rather than the company itself. Cutting jobs shows you are serious about cutting costs, which investors seem to care about more than the admission that your company no longer produces the products or revenues to fully use your workforce. In this case, the motivation is different. New Microsoft CEO Stamps Microsoft has a new CEO after years under Bill Gates replacement Steve Ballmer. The company, which still generates plenty of revenue and profit, is frequently criticized for not growing more, for “losing” its dominant position, and for missing out on big technology shifts, primarily mobile technology. When Ballmer stepped down, nothing was more important than the next CEO making big, drastic moves to “right the ship.” New Microsoft CEO Satya Nadella is doing just that. First, there was a company-wide memo (gladly made public) about how Microsoft would make be making major shifts in its focus and in how it develops, markets, and sells products. Next up, Nadella is “proving” he is serious about changes by …

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Is Microsoft a Good Investment Now?

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Like many others in both technology and finance, I haven’t really looked at Microsoft as more than a staid company in a long time. However, recent events have necessitated a re-examination of the company. Is Microsoft a Buy or Hold? In the fantasy world of investment recommendations and analysts, buy, hold and sell, don’t really mean anything. Wall Street firms are reluctant to rate a stock as a sell lest it hamper their chances of getting investment banking business or other lucrative fees from the covered companies. Thus, most investors know that a “hold” rating is pretty much a sell rating. That doesn’t leave much room, so analysts added ambiguous ratings like Market Perform, and Overweight, among others. Whether or not it’s smart to invest in Microsoft depends, as always on your goals and risk tolerance. That being said, certain recent moves have made Microsoft an attractive play for an investor looking for a technology sector investment. First off, Microsoft is a company in flux. Two seismic level events this summer make any investment in the corporation a bit of a leap of faith. The CEO, Steve Ballmer is retiring. Truthfully, there aren’t many who are losing any sleep over …

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Yahoo Suffers from Activist Shareholders

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In 2008, Microsoft offered to buy Yahoo. This is what so-called, “activist shareholder,” Carl Ichan wanted all along, not to rescue the company or turn the company around, but to make a quick profit by selling it. Of course, those members of Yahoo’s board who had own shares much longer than Mr. Icahn, and those who truly cared about the company wanted no part of what they saw as a low bid from a bigger company just because Yahoo was down on its luck. When Mr. Ichan didn’t get his way, he sold his shares and moved on, no longer caring about the company. This is hardly what I would call an activist. Typically, an activist works for the greater good, and typically for the long-term greater good. Mr. Ichan, in this case at least, was nothing more than a big shareholder not an activist one. All he wanted was to be able to flip his relatively short-term investment in Yahoo into a profit. Calling him an activist is like calling someone trying to flip a house a neighborhood activist for wanting higher prices. It just doesn’t add up. Previously, one could only assume Mr. Ichan was right. Yahoo seemed to …

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Yahoo Bows to Greenmail

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Ok, technically, it isn’t greenmail, but the actions of Carl Icahn in regards to Yahoo! have been very reminiscent of the old strategy.  Basically, Icahn used his fortune to buy up a large amount of Yahoo stock and then complained loudly in the media about the Yahoo board, specifically about their decision not to sell to Microsoft claiming that shareholder value was not maximized. What Icahn really means is that his short term investment has not paid off in a way that he would like and instead of admitting that perhaps he made a mistake, he blames Yahoo’s board for not selling out to Microsoft so he could squeeze a profit out of his position.  But, is he right? Yahoo’s Value and Microsoft’s Offer Let’s be frank, Wall Street has never been a hyper-accurate barometer of a company’s true worth on any given day, but that inefficiency is what theoretically creates the profit potential in the markets.  By finding and investing in a company that is improperly valued, you can reap the rewards when everyone else realizes that the company is wrongly valued and the price moves to make up for it.  But, there in lies the rub.  Everyone else …

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