Microsoft Corporation
Investwrite Essay
By Allie Salzman
April 3, 2014
Have you ever thought about saving for the future? I will need to save for
college like most kids. Families will need to save for retirement and
emergencies. You can save using bonds, putting your money in a bank or investing
it into the stock market. Microsoft would be a good choice as a long term investment
into the stock market. This essay will explain why I believe that.
Microsoft develops, licenses, and supports software, services, and hardware
devices. Microsoft sells its many products to schools, governments, consumers and
companies. The company has five divisions including: Windows, Server and Tools,
Online Services, Microsoft Business and the Entertainment and Devices division. Its
most popular products are Windows, XBox, Skype and Bing. Apple and Google are
two of Microsoft's competitors
Microsoft is in good financial shape. It has a market cap of $340.41 billion, it
had revenues of $77,849,000 and a profit of $21,863,000 from June 30, 2012 to
June 30, 2014. Microsoft’s P/E Ratio is 15.24 and Microsoft’s earnings per share
is $2.70.
Microsoft would be a good long term investment because the company
benefits from people using the Internet more and more. This benefits Microsoft
because the company sells devices and software that allow people to access and
enjoy the Internet. Another reason I think Microsoft will be a good long term
investment is because Microsoft makes XBox. Even though there is competition for
game consoles, XBox is a better product because it is clearer and is more interactive
than its competitors.
Microsoft’s stock price is undervalued at $41.01 per share because its P/E
Ratio is only 15.24. While this is more than Apple’s P/E Ratio Microsoft has better
products and I believe its earnings are going to grow faster than Apple’s
earnings. Google’s P/E Ratio is about double Microsoft’s but Microsoft will grow
earnings as fast as Google because Microsoft has more products. Microsoft’s stock
price has about doubled over the past five years. That might seem like a lot but
Google has gone up by about three times and Apple has gone up about five
times. So I think there’s a greater chance of Microsoft’s stock going up more than
the other companies stock over the next five years.
There are a few concerns I have for Microsoft as an long term investment.
The first is that Google is making software and devices that can replace some of
Microsoft’s products. For example in my school we have chromebooks which are
Google laptops using Google software not Microsoft. Another example is that my
whole PEP class is writing this Investwrite essay on Google Drive. So if Google
becomes more popular in schools kids may want to have it at home. Microsoft is
planning on making Bingbooks (basically chromebooks using Windows software and
made by Microsoft). Microsoft also has the Surface (a tablet that can attach to a
keyboard to make a laptop). I think the Surface is a better product than a
Chromebook because a Surface can be used as a tablet and a laptop
separately. Chromebook is just a laptop.
Microsoft’s view for the future is to become more mobile. Recently, Microsoft
made it possible to put Windows on different kinds of mobile devices. Microsoft
wants to make using a Microsoft phone as easy as an iPhone. I think in 10 years
Microsoft will be become more successful helping people access and enjoy the
internet because Microsoft keeps on inventing new products.
I think Microsoft will be a good long term investment because they sell great
products and software to consumers, schools, governments and companies to
access the internet while it’s becoming more important. Most things are online now
such as newspapers and books and I expect the Internet will become even more
important in people’s lives. Developing devices that take advantage of our reliance
on the Internet will greatly benefit Microsoft’s earnings making it a good choice as a
long term investment.
Sources:
1.Gadgets.ndtv.com
2.Yahoo Finance
3. Microsoft.com