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The Yacktman Fund boosted its Microsoft ( MSFT) stake by 1.7 million shares in the second quarter, bringing its total holdings to 10.6 million shares, or 5.1% of the fund, worth $275 million.

Microsoft, which has a market value of $228 billion, has seen its shares decline 1.1% this year, but they are up 8% over the past 12 months. Long-term, its shares have a lackluster five-year annualized return of 4.4%.

Microsoft, the developer of the Windows PC operating system, the Office suite of productivity software, and enterprise server products such as Windows Server and SQL Server, is now transitioning into cloud-computing products, which is a move to Web-based applications, which means it's entering new markets.

Among its recent efforts, the company has partnered with phone maker Nokia ( NOK), and that is expected to drive large market-share gains for the Windows Phone platform and create the next $1 billion-plus annual revenue stream for the company, Morningstar says.

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