For example, Internet search: "They've been saying, 'wait until you see what we do in search.' Well, we've been waiting," Bonavico says.

It was at last year's analyst day that Microsoft showed off its revamped Internet search engine -- which looked remarkably similar to rival Google's ( GOOG). But MSN continues to lag far behind Google. In the June quarter, Google's $1.32 billion in sales from paid search far surpassed the $582 million in revenue booked by Microsoft's MSN unit, which includes both paid search and other Internet advertising.

To add insult to injury, Microsoft has lost at least one key executive to Google. Earlier this month, Microsoft sued Google and former Microsoft executive Kai Fu Lee over Google's hiring of Lee to lead its China research and development center.

Another hot topic on investors' minds is dividends. Despite its record-breaking special dividend last year, Microsoft's cash balance still sits at a massive $37.75 billion.

"I still think they're keeping too much cash," says Duane Roberts, a portfolio manager with Dana Investment Advisors in Dallas-Ft. Worth whose firm sold its Microsoft holdings last year after the special dividend.

But "looking at what they do with their cash on an ongoing basis is something we want to pay attention to," says Roberts, who would like to see a higher dividend.

Goldman Sachs software analyst Rick Sherlund suggested that Microsoft could talk about raising its current dividend yield of 1.2% to match the 1.8% average of the S&P 500.

Instead of doubling the dividend from a small base -- as Microsoft did last year -- a 50% increase, to 48 cents from the year-ago 32 cents, would bring it in line with the S&P 500, says Sherlund, who notes that Microsoft is on schedule to reassess its annual dividend in August. He has an outperform rating on Microsoft, and his firm has a banking relationship with the company.

But Waddell & Reed's Zinn isn't expecting much talk about cash. "I think that was last year's story," he says. Rather, Zinn believes that it's the new products that will ultimately help the stock get its bounce back.

"You got to wait for Longhorn Vista and make sure that in the meantime the things like Xbox and Sequel Server roll out well," says Zinn, whose firm holds Microsoft shares. "And fiscal 2007 will be a great year."

Of course, if he's wrong about the company's Windows update rendering 2007 a great year, it could mean more investors saying "hasta la vista."

If you liked this article you might like

Peregrine Gets a Loan and a Sale

Peregrine Gets a Loan and a Sale

Chip-Equipment Book-to-Bill Climbs Above Parity

Chip-Equipment Book-to-Bill Climbs Above Parity

Volcanic Paradise

Volcanic Paradise

Matching Money and Morals

Matching Money and Morals

A Getaway From the Ordinary

A Getaway From the Ordinary