Microsoft: The End of an Era?
Picture yourself in March of 1986. A new IPO has been introduced regarding Bill Gate’s innovated Microsoft system. You like technology but may feel the stock is too risky. Nevertheless, your portfolio has been diminishing as of late, and you need something to revitalize it to show off to your colleagues. You buy a couple hundred shares at the 26.00 mark, leave it, and don’t look back at it for more than a decade. It is now 2000; the stock is worth near 60.00 now after dividend and split adjustments. You have made nearly a 6000% profit with your venture into Microsoft.
While the above story may seem enlightening and inspiring, the truth is very few were able to penetrate into such an adventure with Microsoft (MSFT), entering a bit too late or never at all. With an increase of such high margin through the 15 year period, you may be inclined to think that such a repeat will occur again with such a highly regarded company. While such a sentiment is entirely possible, looking at the trends Microsoft has shown through the past six years, I do not see such a situation turning into a reality. The truth is after Microsoft releases its new Vista software, the days of this storied franchise may be over.
With Bill Gates already stepping down from some of his positions in favor of his charity, the steps are in place for Microsoft to fall from its glory days. Like other companies, Microsoft has put itself into a cyclical pattern when eventually the products yielded will be inferior to the products of other competitors. Already margins have decreased in terms of revenue on a yearly basis as from 2003 to 2004 revenue increased nearly 4.5 billion relative to the less than 3 billion increase from 2004 to 2005. The corporation recently also informed its shareholders it will buy more of its shares back illustrating the loss of interest in the stock and the potential for the EPS to be inflated. While the fundamentals are still excellent and a healthy dividend issuance can make the stock appealing, the truth is that Microsoft has hit its climax years ago and is now on the decline.
While the above story may seem enlightening and inspiring, the truth is very few were able to penetrate into such an adventure with Microsoft (MSFT), entering a bit too late or never at all. With an increase of such high margin through the 15 year period, you may be inclined to think that such a repeat will occur again with such a highly regarded company. While such a sentiment is entirely possible, looking at the trends Microsoft has shown through the past six years, I do not see such a situation turning into a reality. The truth is after Microsoft releases its new Vista software, the days of this storied franchise may be over.
With Bill Gates already stepping down from some of his positions in favor of his charity, the steps are in place for Microsoft to fall from its glory days. Like other companies, Microsoft has put itself into a cyclical pattern when eventually the products yielded will be inferior to the products of other competitors. Already margins have decreased in terms of revenue on a yearly basis as from 2003 to 2004 revenue increased nearly 4.5 billion relative to the less than 3 billion increase from 2004 to 2005. The corporation recently also informed its shareholders it will buy more of its shares back illustrating the loss of interest in the stock and the potential for the EPS to be inflated. While the fundamentals are still excellent and a healthy dividend issuance can make the stock appealing, the truth is that Microsoft has hit its climax years ago and is now on the decline.
Picture yourself in March of 1986. A new IPO has been introduced regarding Bill Gate’s innovated Microsoft system. You like technology but may feel the stock is too risky. Nevertheless, your portfolio has been diminishing as of late, and you need something to revitalize it to show off to your colleagues. You buy a couple hundred shares at the 26.00 mark, leave it, and don’t look back at it for more than a decade. It is now 2000; the stock is worth near 60.00 now after dividend and split adjustments. You have made nearly a 6000% profit with your venture into Microsoft.
While the above story may seem enlightening and inspiring, the truth is very few were able to penetrate into such an adventure with Microsoft (MSFT), entering a bit too late or never at all. With an increase of such high margin through the 15 year period, you may be inclined to think that such a repeat will occur again with such a highly regarded company. While such a sentiment is entirely possible, looking at the trends Microsoft has shown through the past six years, I do not see such a situation turning into a reality. The truth is after Microsoft releases its new Vista software, the days of this storied franchise may be over.
With Bill Gates already stepping down from some of his positions in favor of his charity, the steps are in place for Microsoft to fall from its glory days. Like other companies, Microsoft has put itself into a cyclical pattern when eventually the products yielded will be inferior to the products of other competitors. Already margins have decreased in terms of revenue on a yearly basis as from 2003 to 2004 revenue increased nearly 4.5 billion relative to the less than 3 billion increase from 2004 to 2005. The corporation recently also informed its shareholders it will buy more of its shares back illustrating the loss of interest in the stock and the potential for the EPS to be inflated. While the fundamentals are still excellent and a healthy dividend issuance can make the stock appealing, the truth is that Microsoft has hit its climax years ago and is now on the decline.
While the above story may seem enlightening and inspiring, the truth is very few were able to penetrate into such an adventure with Microsoft (MSFT), entering a bit too late or never at all. With an increase of such high margin through the 15 year period, you may be inclined to think that such a repeat will occur again with such a highly regarded company. While such a sentiment is entirely possible, looking at the trends Microsoft has shown through the past six years, I do not see such a situation turning into a reality. The truth is after Microsoft releases its new Vista software, the days of this storied franchise may be over.
With Bill Gates already stepping down from some of his positions in favor of his charity, the steps are in place for Microsoft to fall from its glory days. Like other companies, Microsoft has put itself into a cyclical pattern when eventually the products yielded will be inferior to the products of other competitors. Already margins have decreased in terms of revenue on a yearly basis as from 2003 to 2004 revenue increased nearly 4.5 billion relative to the less than 3 billion increase from 2004 to 2005. The corporation recently also informed its shareholders it will buy more of its shares back illustrating the loss of interest in the stock and the potential for the EPS to be inflated. While the fundamentals are still excellent and a healthy dividend issuance can make the stock appealing, the truth is that Microsoft has hit its climax years ago and is now on the decline.
posted by zzzzzzzzzzz at
8:21 PM
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