April 29, 2011

Microsoft Stock Price Falls After Earnings

Microsoft Earning Release shows Drop in Core Services Revenues
In earnings announcements, releases, or updates - check for revenue levels (growth or declines in hard numbers and percentage terms compared to previous year, previous quarter, or same quarter in a year ago period) in core product or services i.e. Microsoft Reported Earnings on which revealed revenue had declined from its core operating system software. Reasons could include the strong emergence of the ipad and similar tablet computer devices. Because Microsoft was slow to enter or compete in these markets, many people are now using computing devices that don't run on Microsoft operating systems or Microsoft's networks. This could indicate that peoples preference for connecting to the internet and using computers, evolve from PC's and laptops, to these new futuristic like tablet devices that can do many of the same things. Microsoft in my opinion has to respond somehow.

Microsoft losing market share to tablet computers and the ipad
With consumer interest expanding and sales of these Tablet Computers increasing, Microsoft may be missing out on this emerging market. The Tablet Computers don't run on Microsoft software and as more people switch from laptops to tablets, Microsoft may be getting left of this rapidly growing market. Microsoft software is not run on these devices and while more and more people leave their computers and laptops behind for a tablet computer, the effect could weight on Microsoft Core Revenue growth number for sometime. In my mind, the advent of Cloud computing has really contributed to the success of the computer tablet as a preferred way to access the internet.

Cloud Computing and Microsoft

Cloud Computing Servers with Computing Power for Tablet Computers
Now without the need of built in software programs or many other files, Cloud Computing allows access to these type of things using the internet to access them on a remote server. This allows the light, sleek mobility and sharp look of the ipad or other tablet computers which can allow a user to simply access all their files and programs using cloud computing. Someone could log in to their works systems from home with an internet connection. Microsoft can still lease their software to companies that run servers and then lease space to users who can then access Microsoft's products. However, it is my feeling that Microsoft did not have an effective strategy or counter strategy to deal with the emergence of cloud computing and computer tablets. Although I credit them for battling Google with the launch of the search engine Bing, Microsoft should have had their attention more focused on Mobile Search, Cloud Computing, Social Networking, and even video. As more and more people begin to use the internet for the very first time, the services that rule like Sales Force's Customer Relations Management software (basically an interactive database) or EMC Corporation. efforts in the cloud computing field, The future I believe will be ruled by internet giants and makes me wonder if Microsoft days of glory have passed. I associate the revenue in core business that fell, as a correlation to what its stock price has done or even its co-founder, Bill Gates.

Bill Gates Dumps Microsoft Stock

Bill Gates Selling Microsoft Company Stocks
In November of 2010, I started noticing in the newspaper's business section in a column that lists large stock sells by an insider or corporate officer, That Bill Gates was dumping his Microsoft stock. Each day I checked this section of the paper, and sure enough Bill Gates continued to sell block after block, day after day of his Microsoft Stock. I must tell you, I don't pay much attention to what the insiders are doing. Most of these guys or ladies are professionals in their fields, not experts in investing. If they knew investing so well, they would run a hedge fund of something of that nature. That being said, they do have information or insights working for a company, but that doesn't necessarily mean the actions of the market are going to line up exactly with what they think will happen by deciding to buy or sell the stock of their own company. Anyways, back to the point... This selling by Bill Gates pretty much on a daily basis, went on to February 2011. This entire period, I watched Microsoft Stock price go from between $24 to $27 per share. The fact that I was watching and trading in other stocks, some of which went up over 60% during the same time, made me realize Microsoft stock at this point in time, is a dud. I don't see it going over $28 a share by the end of the year. It is currently trading at $25.62 per share. Although the increase I predict is minimal, there are many many better choices in stocks to make if you are looking for a better. I see Microsoft as falling behind in the internet / cloud computing era, losing ground to some might competitors like Apple, Google, or Facebook on various fronts. The way I see it, Bill Gates may have known this back in November 2010 when I first noticed that he was unloading big portions of his Microsoft holdings. Not only that, his heavy selling kept the price down. That's why it hasn't climbed. As Mr. Gates heavy selling of Microsoft stock undoubtedly, put downward pressure on the stock price, those still holding, had to deal with the effects of a stock that didn't really move. Investors shouldn't pay attention to insiders, but when its the second richest man in the world dumping stock of the company he founded, I think an exception can be made!

**Self Updating 90 day chart of Microsoft Corporation**

No comments: