News outlets made a big deal recently about Bill Gates once again being the richest person in America. After several years of hitting different spots on the Forbes annual Top 400 Wealthiest list, his current $72 billion net worth recently helped him overtake the likes of Warren Buffett and the Koch Brothers for the top spot for 2013.
This is excellent news for Gates, of course, who successfully transformed a small Washington software company into a worldwide giant over the last 30 years. The company rode the wave of the personal computer boom and stayed ahead of trends searching for innovative ways to integrate technology into our daily lives.
Unfortunately, while Gates is now focusing his efforts on other ventures, Microsoft (MSFT) has been going through uncertainty. It has been slow to embrace the growing mobile market, at the same time that purchases of traditional desktop computers are dropping. It released the long-awaited Windows 8 operating system earlier this year, which unexpectedly, to the company at least, underwhelmed many loyal users and angered others.
Microsoft stock has been a traditionally smart buy for decades, and its software dominance and stability helped it avoid the high-tech crash of 2000. But some recent challenges have caused some to wonder if Microsoft may be growing past its prime.
Over the last year, the stock has seen a 24.75 percent increase on NASDAQ, from a low of $26.26 this spring to a high of $36.43 in July. NASDAQ recommended it as a buy earlier this week, where it was trading around $32-$33 per share.
So where can investors go from here?
Hopefully nowhere, as there are a lot of good reasons to hang onto your stock, or at least a lot of balls that are up in the air right now which could be caught and lead to a profitable 2014 and beyond.
There are traditional, sentimental reasons for holding onto your shares as well, since it may have been part of many people's portfolio for decades. Or you could have confidence that it will eventually make in-roads in mobile, bring in a strong CEO, and continue to create strong products.
Let's examine some of these current factors.
*Happy investors: Earlier this week, Microsoft shareholders enjoyed hearing the news that there would be a 22 percent increase in the quarterly dividend, which jumped from 23 cents to 28 cents. It's payable in early December, so has the possibility of stimulating some Christmas shopping or at least boosting the stock a bit more. Its board also announced a new $40 billion buyback program, which replaces a similar program that expires later this fall. Both announcements caused a 1.8 percent rise in stock that day.
*More mobile: Early this summer, much buzz was given to Microsoft's $7.2 billion purchase of Nokia (NOK). This was generally seen as a wise move to incorporate an existing manufacturer, rather than create something new and not very original that the marketplace may not fully appreciate. But not everyone was aware that Microsoft is also entering the app market. Benzinga reports that Microsoft quietly created the Windows Phone Store, where Windows Phone owners can search for and download apps, and developers can upload apps for the public's enjoyment. Besides being a service to phone customers, it's also a moneymaker for Microsoft and participating developers. Transactions are already up to 9 million a day or 270 million a month since June. In addition to hopefully luring customers away from Apple (AAPL) iOS or Google (GOOG) Play through its new shop, Microsoft is offering $200 credit for people wanting to trade in their iPad for a new Microsoft Surface tablet.
*Fun and games: Though mobile wars do create larger headlines, the game console war is taking part on a different front. Microsoft, Sony (SNE) and Nintendo (OTCPK:NTDOY) have ramped up their already serious competition with new consoles that have just been released or coming out soon. Microsoft's contribution is the Xbox 360. While this is old news to anyone following high-tech, new research announced this week showed that video game retail sales rose unexpectedly from August 2012 to August 2013 ($516.3 million to $521 million). Digital sales are also growing, and this fall and winter, several new titles for platforms may keep games - and game systems - selling well.