Thinking About Microsoft

Microsoft is a company that really doesn't seem to get much respect.  

• They are one of the last AAA rating companies out there.  
• They have a terrific franchise in the Office Suite AND Windows.
• They trade at under 10x 2012 earnings
• They pay a 2.6% dividend
• They have over $50b of cash.

I have been doing a lot of reading of late (long flights as I came back stateside).  The book I am reading is the Walter Isaacson's biography about Steve Jobs.   I highly recommend it. I am also reading the recent issue of PC World.  As I read the PC World, I started thinking how many of the articles were about Microsoft products.  Not only do they have a bunch of products about to launch, but I believe they are the most innovative products Microsoft has created.

• Surface is the first one.  Apple with the Ipad has had a hammerlock on the tablet market (and rightfully so as it is a terrific product).  Reading the review, the big thing it does is that it is much more seamless between computers and tablets they will both using the same operating system (Windows 8).  They are also combining the hardware and software components, which has been a big key to Apple's success... that is a first for MSFT.  The editor said it was the first Mircrosoft product he can ever remember saying, "I can hardly wait for that".
• Office 2013 and Office 365 looks like a major step-forward in the office suite.  One super cool feature is the ability to import a pdf file directly into word and edit it. You can also bring a table from a pdf into word or excel and edit.  That is great functionality.  Everything is going much more to the cloud, and I know that would be great for people like me who work on files on different computers regularly.
• Windows 8 looks pretty edgy and takes MSFT from having a great operating system for computers  to one that will work great on touch screen tablets and smartphones.

 You never know with new products, but the reviews I am reading and the desire for many users to have a 3rd option (besides Apple and Android-based products), makes me think people should not underestimate Mr Softie.

I will think about doubling my stake, especially if we get a little pullback under $30.