A funny thing happened on the way to a bleak year for software investing. Microsoft (MSFT) hit an intraday price of $28, which is a 52-week high and had represented an enormous psychological and technical resistance point. As notable, the stock has had a dramatic reversal in the last five weeks.
Has the stock finally broken out of its multiple year malaise? Not for me to say here (after all, this blog is NOT about providing investment advice or recommendations), but it would be disingenuous of me to suggest I'm not pleased by the relative strength the stock has shown of late.
What's driving the newfound appreciation for this long dormant behemoth? Here's what I've heard from a straw poll of some fellow buysiders:
- SQL Server, BizTalk Server and Visual Studio have finally shipped
- Vista is coming
- Office 12 is coming
- Office and Windows Live (i.e., the Ray Ozzie memo fallout)
- XBox 360 is here (and PS3 isn't)
I'm not surprised to hear that product cycles are the real impetus for the stock movement. However, I would contend that Microsoft did equally important work in the last 24 months to lay a foundation for this recent resurgence...
- Settling its myriad lawsuits and antitrust issues
- Proactively paying a dividend (something other megacap tech companies would do well to consider)
- Aggressively buying back shares (and curtailing excessive dilution from options issuance)
In any event, technology investors (particularly those who are long-oriented) have to be pleased with Microsoft's price action, not coincidentally on the same day Google (GOOG) broke $400 per share.
Note: I, and/or funds I have discretionary control over, maintained a long equity position in MSFT at the time of this writing.
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