NEW YORK (TheStreet) - Microsoft
(MSFT) shares ticked higher in morning trading, gaining 2.2% to $33.50 on speculation Ford
(F) CEO Alan Mulally could replace Steve Ballmer at the helm.
AllThingsD writes Mulally is ahead of other candidates including former Nokia (NOK) CEO Stephen Elop and Skype's Tony Bates. Elop is now Nokia's Executive Vice President, Devices & Services, and will become an Executive Vice President at Microsoft once the deal for Microsoft to buy Nokia's devices and services business closes.
Overall, Microsoft shares are leading the S&P 500 which is down 0.53%.
Mulally has been credited with Ford's revival during his seven-year tenure as the automaker's CEO. Formerly CEO of Boeing (BA) Commercial Airplanes, he oversaw its growing dominance over rival Airbus.
Mulally's contract tied him to Ford until the end of 2014 before the company's board of directors amended, allowing him to explore other options, Reuters reports.
Ballmer anchored his final annual employee meeting on Thursday, and is slated to retire within 12 months.TheStreet Ratings team rates Microsoft as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate Microsoft a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- MSFT's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 10.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- MSFT's debt-to-equity ratio is very low at 0.2 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.53, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, Microsoft's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Microsoft reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, Microsoft increased its bottom line by earning $2.60 vs. $2 in the prior year. This year, the market expects an improvement in earnings ($2.71 vs. $2.60).
- You can view the full analysis from the report here: MSFT Ratings Report.
Check Out Our Best Services for Investors
Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts
Check Out Our Best Services for Investors
Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
Every recommendation goes through 3 layers of intense scrutinyquantitative, fundamental and technical analysisto maximize profit potential and minimize risk.
Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.