By Jordan Faigen
Microsoft Corporation (NASDAQ:MSFT) just announced its new Surface tablet this week, and you can already place your order for the latest Microsoft Corporation (NASDAQ:MSFT) experience.
Microsoft in the News
On Tuesday this week, Microsoft Corporation (NASDAQ:MSFT) unveiled their latest Surface Pro 3 tablet, now larger and lighter than the original. CEO Satya Nadella fully supports the company’s focus on hardware noting, “We are not building hardware for hardware’s sake. We want to build experiences that bring together all the capabilities of our company.” The tablet comes in three models, ranging from $799 to $1,949, and comes with Microsoft Office’s software suite. It is clear that this tablet is the latest competition to Apple’s Air laptop now that Microsoft is considering itself a ‘devices and services’ company.
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Microsoft also made headlines this week in China. China’s Central Government Procurement Center demanded that Windows 8 be excluded from the bidding process on computer purchases. China is a major Microsoft customer, which is why the ban has come as such a surprise to Microsoft. However, Microsoft Corporation (NASDAQ:MSFT) has been working hard to make sure that all current software meets government requirements, with the hopes of lifting the ban.
A Financial Expert Perspective
Motley Fool contributor, Bob Ciura, recently recommended BUY MSFT, focusing on the company’s strength as a fantastic dividend stock. Ciura argued, “If you’re on the hunt for a dividend-paying stock with tons of cash on the balance sheet and the ability to rack up boatloads of free cash flow to support its dividend, look no further than Microsoft. Because the company’s services generate fat margins without requiring huge capital expenditures, Microsoft almost has more cash than it knows what to do with.”
Looking at the company’s last quarter, Ciura noted, “Microsoft recently wrapped up its fiscal third quarter, in which it collected $5.6 billion in profits. Turning to its statement of cash flows reveals the company’s hugely successful operations. Over the first nine months of the fiscal year, Microsoft has already generated more than $18.5 billion in free cash flow.”
Bob Ciura’s Past Recommendations
Ciura’s latest recommendation to BUY Microsoft Corporation (NASDAQ:MSFT) is actually his first. However, he has successful recommended other technology companies, earning a +4.4% average return per recommendation and a 74% success rate of recommendations.
Ciura recently recommended BUY Apple (AAPL) on May 1. Even though the company is taking on debt, Ciura thinks that Apple Inc. (NASDAQ:AAPL) is still the right move. He argues, “It became clear that the market wasn’t going to give Apple a premium valuation for its cash pile since that cash was earning almost nothing for shareholders. By issuing extremely low-cost debt to fund its dividend increases and share buybacks, Apple Inc. (NASDAQ:AAPL) is providing an instant return to shareholders. That’s why you shouldn’t be at all concerned about Apple’s bond sales.” Ciura has recommended Apple twice and has earned an average return of +4.9% on the stock.
In the same technology vein, Ciura has also earned a strong return recommending Oracle Corp. (ORCL). On March 20, Ciura recommended BUY Oracle, mentioning that investors need to be patient with the stock. He noted that the company is, “rapidly switching focus from hardware products and services to software, particularly in the cloud. While this is clearly the right strategic direction to take, it will take time.” However, Ciura also noted, “Oracle Corporation (NYSE:ORCL)’s software and cloud businesses are growing rapidly, and the company even posted growth in its hardware unit.” Ciura has earned a +8.6% average return on the stock from this one recommendation.
Outside of the technology sector, Ciura has seen both positive and negative results.
In late March of this year, Ciura recommended BUY ExxonMobil (XOM), pointing to the company’s increase in production. Ciura noted, “In all, Exxon Mobil Corporation (NYSE:XOM) intends to begin production from 28 major oil and gas projects between now and 2017. Of these, 22 will start-up over the next three years. The company won’t stop there; in fact, Exxon Mobil Corporation (NYSE:XOM) pledges another $190 billion in further investments over the next five years to continue to explore for and develop new opportunities.” Even though the company’s production fell last year, Ciura is pleased with the company’s “large lineup of projects set to being production this year.” Ciura has earned a +2.8% average return on the stock based on his four recommendations.
However, Ciura was not as successful recommending BUY Fossil Group (FOSL) on April 10. Ciura pointed out that consumer spending has been down and Fossil Group Inc (NASDAQ:FOSL) has not been getting a lot of love from the market. However, Ciura noted, “While the overall economy struggles to take off, Fossil Group Inc (NASDAQ:FOSL) is having no trouble producing strong growth. It’s growing across the world as well, particularly in the emerging markets such as Asia. Going forward, further growth is entirely possible since Asia Pacific represents just 12% of Fossil’s total sales. Fossil is busily investing to build out its emerging market presence, and the results speak for themselves.” Yet, this recommendation has left him with a -6.0% average return on the stock.
Ciura makes recommendations across sectors, but do his strengths lie with technology? Will Microsoft meet his expectations as a “fantastic stock”?
Jordan Faigen covers financial markets and the latest stock market news. She can be reached at [email protected]