Don't Sleep on Microsoft
David is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Remember Microsoft (NASDAQ: MSFT), that great growth company that created enormous wealth for its shareholders in the 90's? Remember the innovations that came from that company? Fortunately for you (because it creates an investing opportunity), most people have forgotten that Microsoft, instead focusing on a company that has struggled to innovate and whose stock price has reflected that fact. However, there is much to get excited about for Microsoft. Here's a look.
Windows 8 looks great. And no, I'm not referring to the tile layout (personally I don't like it) or the ability to use your face as a password. I'm referring to the fact that Microsoft has finally stripped out all of the old, clunky, legacy code, creating a faster booting, faster loading, more energy efficient operating system.
Moreover, they went the extra mile in making the environment easy for app developers, providing tools to allow simple development across many coding languages. This, combined with the large, established Windows market, should help Microsoft build out a formidable app store (a new revenue stream).
Microsoft's search business could be a huge stealth winner from the migration to HTML5. First, Microsoft has made significant investments in Internet Explorer 10, making it what will probably be the fastest web browser for HTML5 sites. This in turn should drive more Bing searches, as people use the IE 10 search box instead of going to Google (NASDAQ: GOOG).
Secondly, HTML5 allows Facebook to further infiltrate and integrate with the web. As Facebook becomes a more important part of the browsing experience, Microsoft wins (Bing is Facebook's search engine).
Lastly, as I'll talk about below, their mobil search business could benefit from the adoption of Windows Phones.
The failings of Research In Motion (NASDAQ: BBRY) create a great opportunity for Microsoft. The recent troubles at Blackberry (blackouts and failure to innovate) may leave enterprise customers searching for a new company to work with for the next upgrade cycle. Moreover, no company wants to upgrade with a technology provider that may not be around to provide support and other services, and at Research In Motion's current pace, people are starting to wonder about RIMM's lifespan.
Enter Microsoft. A Windows Phone would integrate seamlessly for most enterprise companies. Security would need to be addressed since Microsoft has been notoriously lacking in this area. But I am confident, with the new stripped down Windows 8 code, Microsoft could provide as secure an environment as Android or iOS. Gaining even some of the enterprise Blackberry users would be a huge win for Microsoft, allowing them a stable base of customers from which to grow. Also, as mentioned before, more Windows Phones will translate to more Bing searches, helping Microsoft further cement its place in search.
There are many exciting opportunities for Microsoft ahead that the market is currently not pricing in, making this inexpensive blue chip worth a closer look.
I am long Jan12 390/405/420 call butterflies in Apple. I do not have positions in any of the other companies mentioned.