This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Microsoft Down but Not Out

Although at one point, Microsoft focused solely on software and relied on OEM partners such as Hewlett-Packard (HPQ - Get Report) to produce the hardware, this all changed recently when Microsoft decided to build its Surface tablet in an effort to compete with Apple's iPad dominance. However, Surface sales have not taken off as expected -- at least not according to initial sales figures.

However, with Dell's strength in hardware and Microsoft's software dominance, all of this can change. It is not farfetched to think that Microsoft could then produce a unified system that could take on Apple. But will it be strong enough to save a dying PC industry? While I that should not be the focus, Surface has proved that Microsoft is capable.

However, that the company has resisted supplying specific sales figures for Surface is not encouraging. But if we are left to our own assumptions, the results are mixed with a slight bias toward the negative side. But there's hope -- especially since Microsoft said it sold 60 million Windows 6 licenses in the quarter.

Then again, Amazon's (AMZN - Get Report) new Kindle Fire also continues to be a top seller on the market. At an attractive $199 price point, this only increases the pressure on Surface to be more than advertised. Right now, it's not off to the market-shaking fury that the company hoped.

The good news is that Microsoft understands what it is up against. And the company seems eager to morph out of what it is traditionally known for. In the process, if it can buy itself some time by investing in Dell, what's the problem with that? What else is it going to do with its cash after having just raised the dividend? Sit on it?

The PC industry is dying. And if Microsoft feels that it can keep it on life support a little bit longer while it figures out its mobile strategy, then investing in Dell is as good of a venture as any. On that basis, I would continue to accumulate the stock at current levels. Despite the pessimism, this is a company that still generates tons of cash flow and also pays a great yield.

At the time of publication, the author was long AAPL.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.
Richard Saintvilus is a private investor with an information technology and engineering background and has been investing and trading for over 15 years. He employs conservative strategies in assessing equities and appraising value while minimizing downside risk. His decisions are based in part on management, growth prospects, return on equity and price-to-earnings as well as macroeconomic factors. He is an investor who seeks opportunities whether on the long or short side and believes in changing positions as information changes.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
AAPL $95.03 0.21%
AMZN $673.50 12.00%
HPQ $12.57 0.00%
MSFT $49.54 -0.72%


Chart of I:DJI
DOW 17,830.76 -210.79 -1.17%
S&P 500 2,075.81 -19.34 -0.92%
NASDAQ 4,805.2910 -57.85 -1.19%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs