This Day On The Street
Continue to site right-arrow
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
TheStreet Open House

Microsoft Aims to Unstick 'Laggard' Label

Although Microsoft (MSFT - Get Report) is betting heavily on its Longhorn operating system -- still some two years away -- company bulls are counting on a menu of other products to drive growth in the interim.

But are these offerings meaty enough to help Microsoft's shares lose their recent reputation as a straggler?

The company's stock has slumped nearly 4% from a year ago vs. a 1.7% rise in the Goldman Sachs Software index. The shares haven't broken the $30 mark since March 2002, stubbornly eluding analysts' one-year price targets that reach as high as $35.

Longhorn, the next version of the company's flagship Windows operating system, has been hailed as the likely driver of Microsoft's largest upgrade cycle ever.

Last month, the company put to rest speculation about its launch date by announcing that the new desktop operating system will be released in the second half of 2006 and that the new server OS will be released in 2007. That was earlier than conjectured in the trade press, perhaps because Microsoft had to drop an often-touted, new file system to meet the date.

"Everybody is making a big thing about Longhorn, and it should be a big thing because that's the next big OS," said David Hilal, an analyst with Friedman, Billings, Ramsey & Co. But "there's a slew of intermediate products coming out, which I think in aggregate are pretty solid." (Hilal, who projects 5% top-line growth for Microsoft next year, has an outperform rating on the stock, and his firm hasn't done any banking with Microsoft.)

The releases slated by Microsoft between now and Longhorn include:

  • a 64-bit version of Windows Server, which has been delayed to the first half of 2005;
  • a new version of Microsoft's SQL Server database software, code-named Yukon, coming in the first half of 2005;
  • Visual Studio 2005, the next major release of Microsoft's development platform, to be rolled out with SQL Server next year; and
  • the next-generation Xbox console, rumored to be hitting shelves by the 2005 holiday season.

Those touting Microsoft say the company's server business -- which represented 23% of total sales last year -- will continue to help the world's largest software maker post steady growth until Longhorn arrives. Last year, the server business posted the biggest percentage sales jump of Microsoft's largest business divisions.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link 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

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, 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
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,416.85 +225.48 1.31%
S&P 500 2,021.25 +19.09 0.95%
NASDAQ 4,683.4070 +45.4130 0.98%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs