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Excerpt from our One Page Barron's Summary (receive it weekly by email by signing up here):

TECHNOLOGY TRADER: Microsoft's Bold Voyage Begins by Bill Alpert

Highlighted companies: Microsoft Corp. (NASDAQ:MSFT), Cisco Systems Inc. (NASDAQ:CSCO)
Summary: Shares of Microsoft Corp. (MSFT) are up 35% since June to $29 as investors anticipate big upgrade revenues from Vista and Office 2007. Shares presently trade at 20x 2006 expected cash flow of over $15b. While some investors are skeptical that Vista can deliver the growth bulls think it Microsoft Chart 3 12 06will, Barron's likes last week's much-hyped launch, the fact that profit margins on Vista and Office exceed 60%, and that forecasts are conservative in estimating only 50% of its installed base will upgrade. New server-based voice communication and collaborative software look to be stiff competition for Cisco Systems Inc. (CSCO), and it seems MSFT will finally start turning a profit on Xbox 360. The company plans to use up to $40b of its massive cash stash in stock buybacks, which combined with a rise in revenues from its new products could get per-share cash-flow up to 15%, and push shares into the mid 30s.
Related: Microsoft's Vista Goes On Sale To Corporations (yawn)Survey Shows There May Be Hope for Microsoft's Zune After AllHow Broken is Microsoft?PS3, XBox or Wii: Pros and Cons of Gaming ConsolesMicrosoft F1Q07 Earnings Conference Call Transcript

Source: Microsoft: Exceptional Cash Flow May Boost Share Price -- Barron's