| disolitude said:
What you just said doesn't support your argument that microsoft isn't undervalued and Apple is. Its true that microsofts price to earnings ratio is about 10, and Apples was 15, but the lower that number the better the stock. Microsofts stock returned 1/3 more value per stock than Apples...hence it is undervalued. Both companies are somewhat undervalued, but Microsoft more so than Apple. Also, your statement of their core business stagnating...check out Microsofts latest earnings. Windows is down only 6% and this is 3 years in to Windows 7 and just before Windows 8 launch which only has marketshare to gain as Windows 7 pretty much remains unchallenged in the desktop world. Besides, Microsoft revenue is fairly evenly divided amongst all divisions and Windows division is now actually 3rd in overall revenue. |
Investors don't buy the company as it is today, they buy the company they see tomorrow. From 2008 to 2011, Microsoft's net income has grown 31%. In the same time period, Apple's net income has grown 448%. That trend continues, as Microsoft just reported quarterly growth less than 10% YoY, and Apple is about to report at least 60% growth YoY.
That's what investors are buying.
It doesn't help Microsoft that nearly all the markets it's strong in are either slow-growing or in decline. They have a number of gambits to break into growth markets, as usual, but the only division that I expect to reliably perform well is the server group. The conventional PC market has peaked, and unless Windows 8 busts MS into the mobile PC market in a big way, the decline of desktops and laptops will drag Windows and Office down with them.
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