Es war einmal eine fantastische Aktie ....
Not Buying Into the Microsoft Hype
There has been a good deal of chatter on Microsoft Corporation (MSFT) this week so I thought it was worth a discussion...
First, we had the hype surrounding the release of Halo 3. Now, I don't follow the video game area but even I have heard of this game. Aside from some issues of minor scratches on the discs, the reviews seem to be unanimously positive and it feels like every article I read talks about how successful the game will be. So yes, that seems like an encouraging point.
On top of that we had a report from The Wall Street Journal this week that says Microsoft is in talks to buy a minority stake Facebook. The buzz on the Facebook has been absolutely huge so some are excited to see Microsoft move into this area.
However, before getting too wrapped up in the excitement, I think there is an important point to consider on Microsoft - expectations.
Once upon a time Microsoft was a fantastic stock. I remember those times and I would love to have them back. Unfortunately, they were a decade ago. Those good times ended when the stock peaked in December 1999. The shares then spent the next year sliding lower. Since then the stock has done...well...nothing...
There has been some back-and-forth movement and some dividend activity but the shares are more or less unchanged. Now I know that some will argue this is ancient history but I do think its relevant to the discussion about expectations. According to Zacks, 15 of 19 analysts rank the stock with a "buy" rating or better.
That is 79 percent...79 percent on a stock that has done nothing in six years.
So yes, getting in bed Facebook may be a good move and by all accounts the new video game will be a hit, but I think it is fair to ask - how much of this is already factored into the expectations for the stock? I think that is the real issue to ponder.
If nothing else, it may be better to wait and see some signs of life from the shares. Sure, that means you would give up part of the move, but I think that beats getting stuck in a dead money situation. At least that is my take...
If you have thoughts on this topic, I would love to hear them...
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