The Millionaire Maker Investment Advisory
  • Introduction
  • Market Conditions
  • Commodities Corner
  • Featured Interview
  • Understanding Markets
  • Understanding Money
  • Understanding Value
  • The Tax Shelter
  • Retire Rich
  • Radio Blog
  • Contact

Microsoft buying Nokia

9/4/2013

0 Comments

 
Picture
MARKET CONDITIONS

Software giant Microsoft (Nasdaq: MSFT) announced over the weekend that it would buy Finland-based Nokia's mobile-phone business for $7.2 billion.

Microsoft claims the deal will boost its earnings. But Nokia hasn't made a profit in three years. I don't think the transaction is a good idea but we'll just have to see how it plays out

The good news is Microsoft's relationship with Nokia (which first began when Nokia started selling Windows-run smartphones in 2011) hasn't hurt the software giant so far. Even if this new transaction turns out to be a bad decision, it shouldn't matter this time around.

It shouldn't hurt Microsoft's two most important divisions: Microsoft Office and Server & Tools. Both divisions contain numerous billion-dollar franchises, some of which are growing annual sales at double-digit rates.

Further, it won't prevent Microsoft from gushing free cash flow, raising its dividend, buying back shares, having a great balance sheet, earning thick profit margins, or generating high returns on shareholder equity; all the financial clues we look for in a global dominating dividend grower.

Microsoft shareholders can find more information about the acquisition in a PowerPoint presentation here.

Microsoft also announced it'll offer a seat on its board of directors to the president of an investment firm called ValueAct Capital. ValueAct owns $2 billion of Microsoft stock and it shares our view that Microsoft is a great software company for businesses rather than independent consumers. I consider this a good sign.

Our perceptions and advice on Microsoft remains the same:

BUY Microsoft (Nasdaq: MSFT) up to $34 a share.
0 Comments



Leave a Reply.

    RSS Feed

    Archives

    December 2014
    November 2014
    March 2014
    February 2014
    January 2014
    December 2013
    November 2013
    October 2013
    September 2013
    August 2013
    July 2013
    June 2013
    May 2013

Powered by Create your own unique website with customizable templates.