Lombardi: Stock Market Commentary & Forecasts, Financial & Economic Analysis Since 1986

Another Lost Decade for Microsoft?

Thursday, February 7th, 2013
By for Profit Confidential

Microsoft Craving AttentionBlackBerry (NASDAQ/BBRY;TSX/BB), formerly known as Research In Motion, surged 12% on Monday after an upgrade from Bernstein Research to an “Outperform” and a $22.00 price target. Market optimism toward the company’s newly launched “BlackBerry 10” (BB10) operating system and line of devices is driving some speculative money into the stock.

And while there’s some excitement around BB10, the same cannot be said for Microsoft Corporation (NASDAQ/MSFT) and its new “Surface” tablet operating on “Windows 8.” The Surface looks pretty good; but in my view, the price point is too high and well, Microsoft just doesn’t have a following in the lucrative and quickly growing mobile sector—that will take time.

The reality is that Microsoft’s glory days are over, and I doubt they will come back, based on what I’m seeing at this time. The Surface is not turning out to be a killer product.

Microsoft is no longer the stock that Wall Street craved in the 1990s, when the stock price traded at a record high of over $58.00 in December 1999. That was then. In the 12 years since, the maker of the Windows operating system has fallen by over 50%, and the stock, once held in high regard by institutions and retail investors, has become a non-factor in the technology sector, based on my stock analysis.

Microsoft, like many other companies in the personal computer (PC) market, is struggling with the sliding demand for PCs, as tablets accelerate in popularity, based on my stock analysis.

Revenues are estimated by Thomson Financial to grow eight percent in fiscal 2013 and 8.4% in fiscal 2014. My stock analysis indicates that these growth metrics pale in comparison with the new generation of technology growth stocks, such as Google Inc. (NASDAQ/GOOG), which is estimated by Thomson Financial to grow its revenues by 44.0% this year and 14.8% in 2013. Facebook, Inc. (NASDAQ/FB), which is trying to convince the market that it’s the real deal, is slated to grow revenues at 30.8% and 27.3%, respectively, for 2012 and 2013. (Read “Why Facebook May Be Ready for Prime Time.”) The reality is that Wall Street wants to see growth, and Microsoft is not delivering, according to my stock analysis.

  • Double your money every year for 24 years running?

    Since 1989, we've made 912 option picks, with an average annualized profit of 166.17% per recommendation.

    All from Lombardi's best option picks!

    Click here to learn more.

My stock analysis suggests that the Windows 8 smartphones have some catching up to do. Microsoft has to convince smartphone buyers that the Windows 8 platform is superior to Apple Inc.’s (NASDAQ/AAPL) “iOS”, Blackberry’s BB10, and Google’s “Android” platforms, which are the market leaders, according to my stock analysis

Microsoft’s initial entry into the hardware market with its Surface tablet is looking decent; albeit, I wouldn’t be betting my money on success, based on my stock analysis.

While gaining market acceptance for the Surface tablet and Windows 8 smartphones will be a challenge, Microsoft cannot rest; Microsoft needs to go back to the strategy room. And according to my stock analysis, continued declines in the PC market will hurt the company more, and this could eventually lead to another decade of futility for Microsoft shareholders.

VN:F [1.9.22_1171]
Rating: 5.5/10 (2 votes cast)
VN:F [1.9.22_1171]
Rating: 0 (from 2 votes)
Another Lost Decade for Microsoft?, 5.5 out of 10 based on 2 ratings
  • AndersOlesen

    Amazing how many times you can write "my stock analysis" in such a short article. Is that an attempt at search engine gaming?

This is an entirely free service. No credit card required.

We hate spam as much as you do.
Check out our privacy policy.

George Leong - Financial Planner, ConsultantGeorge Leong, B. Comm. is a Senior Editor at Lombardi Financial, and has been involved in analyzing the stock markets for two decades where he employs both fundamental and technical analysis. His overall market timing and trading knowledge is extensive in the areas of small-cap research and option trading. George is the editor of several of Lombardi’s popular financial newsletters, including The China Letter, Special Situations, and Obscene Profits, among others. He has written technical and fundamental columns for numerous stock market news web sites, and he is the author of Quick Wealth Options Strategy and Mastering 7 Proven Options Strategies. Prior to starting with Lombardi Financial, George was employed as a financial analyst with Globe Information Services. Add George Leong to your Google+ circles

The Great Crash of 2014

A stock market crash bigger than what happened in 2008 and early 2009 is headed our way.

In fact, we are predicting this crash will be even more devastating than the 1929 crash…

…the ramifications of which will hit the economy and Americans deeper than anything we’ve ever seen.

Our 27-year-old research firm feels so strongly about this, we’ve just produced a video to warn investors called, “The Great Crash of 2014.”

In case you are not familiar with our research work on the stock market:

In late 2001, in the aftermath of 9/11, we told our clients to buy small-cap stocks. They rose about 100% after we made that call.

We were one of the first major advisors to turn bullish on gold.

Throughout 2002, we urged our readers to buy gold stocks; many of which doubled and even tripled in price.

In November of 2007, we started begging our customers to get out of the stock market. Shortly afterwards, it was widely recognized that October 2007 was the top for stocks.

We correctly predicted the crash in the stock market of 2008 and early 2009.

And in March of 2009, we started telling our readers to jump into small caps. The Russell 2000 gained about 175% from when we made that call in 2009 to today.

Many investors will find our next prediction hard to believe until they see all the proof we have to back it up.

Even if you don’t own stocks, what’s about to happen will affect you!

I urge you to be among the first to get our next major prediction.
See it here now in this just-released alarming video.