NEW YORK ( TheStreet) -- Don't look now, but Microsoft (MSFT - Get Report) has replaced Apple (AAPL - Get Report) and Netflix (NFLX - Get Report) as the market's favorite battlefield stock.
There are analysts who consider the Redmond. Wash.-based software house to be dirt cheap, and there are others who think the whole edifice is about to come crashing down.
Those who consider the stock dirt cheap point to recent Apple-like moves,
a dividend hike and stock buyback
. Those who see imminent doom point to the slow up-take of Windows 8, the failure of Windows Phone against Apple, and the Azure cloud's troubles competing with the
(AMZN - Get Report)
CEO Steve Ballmer, who has announced his retirement next year, defended the company this week with an analyst webcast. He said only 20% of revenue comes from consumers, only one-quarter of revenue comes from Windows, and that more than half of all revenue comes from outside the United States and Canada.
Our Barry Randall calls what has happened with Microsoft under Ballmer
The price paid for its earnings has fallen, from 47 times a decade ago to 13 times now. The company has grown, but has not surprised, and just as with Apple is now valued
more for the cash it gives today
than its growth prospects tomorrow.
It's going to be hard to change that trajectory, because Ballmer has set a firm course for the company's future in buying Nokia, and his successor will be chosen by people loyal to him.
Many fail to see Microsoft's stock course as Apple-like because the battlefield appears small, the $5 per share between $30 and $35. But Microsoft has nearly 10 times as many shares as Apple, 8.3 billion. If the two companies had an equal number of shares, Microsoft would be trading in a $300 to $350/share range.
My own view is that Wall Street prefers monopoly to competition, and that the U.S. Justice Department was more successful in attacking Microsoft on anti-trust grounds than anyone will ever know.
While Microsoft won the battle, it lost the war. It was forced to add layers of bureaucracy, professional naysayers, to its ranks, which frustrated its best people and eventually destroyed its innovative capacity. Like IBM with Windows, it became vulnerable to the first "kid with a Clue" who came along, and many did.