Why I like Microsoft (as an investment)

Companies Cling to Cash


Much of the cash accumulating in corporate coffers belongs to technology companies, which typically don't need to tie up nearly as much money in plants, real estate, equipment and inventory as do manufacturers and retailers.

Tech companies in the Standard & Poor's 500-stock index now hold some $352 billion in cash and short-term investments, according to Standard & Poor's index analyst Howard Silverblatt.

Among the top holders are Microsoft Corp., with $43.25 billion in cash and short-term investments; Cisco Systems Inc. with $38.9 billion; and Google Inc. with $33.4 billion.

Comment: MSFT. I view Microsoft as like a utility company. Corporate american (and probably the world) will keep buying Office, Windows 7, etc. Frankly Microsoft has failed to make much of a dent in the music player segment (Zune), and their phones have been largely a bust (but Windows 7 phone may do well). XBox 360 is widely popular. The PE ratio is low and it pays dividends. I like this stock. One can have 100 shares for a mere $ 2700 and it will return better than a CD.

1 comment:

  1. Fool says it better:

    Like the cigarette companies, a truly great business can continue to succeed without having to reinvent the wheel. Microsoft (Nasdaq: MSFT) fits the bill: Almost all of Microsoft's profits come from virtual monopolies (such as Windows and Office) that are indispensible to business. Market share in Office Suites, for instance, exceeds 94%.


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