Innovator or Imitator: Is Microsoft Now a Good Long?

by: SA Editor Rocco Pendola

After Yahoo (NASDAQ:YHOO) solicited me for the better part of the day Thursday to download Microsoft's (NASDAQ:MSFT) Internet Explorer 9, I finally did it. IE8 felt like it had been moving along sluggishly anyhow. So now, I am running IE9 and my computer is no longer acting up.

When Google (NASDAQ:GOOG) came out with Chrome, I installed it and loved it. Compatibility issues, however, forced me to go back to IE. Many of the sites I use simply do not function properly outside of Internet Explorer. It's a shame because I feel so uncool not using Chrome, or Mozilla's Firefox, for that matter.

Several things bother me about how Microsoft, particularly, but Yahoo as well, weasel their way into our lives. When Google urged me to download Chrome, I took the overtures as subtle and appropriate. For some reason, Yahoo's pushing felt like a desperate attempt on its part to become relevant again. They should be happy that millions of people, including me, still use them as our go-to or homepage. We don't click on the predictable ads, but we still find out the temperature at the site. After deactivating the Yahoo! Toolbar post-installation (they basically make you install it), I expect a cold call from Vin Diesel asking me to put it back in.

My biggest issue, however, surrounds how Microsoft appears to blatantly rip off the competition. For instance, Windows Vista was an unmitigated disaster. Windows 7, however, is the complete opposite of Vista, but some of the new features smack of computing on a Mac. For starters, you can drag and drop a lot more. It's slicker. More intuitive. Much easier to use. It's clearly a Mac rip-off.

And now, oddly, IE9 looks, feels, and acts a whole lot like Google's Chrome.

*Tabs from IE9

In any case, it works. Microsoft's browser and operating system come standard on some (read: almost all) of the world's best, but still relatively inexpensive computers.

Microsoft is not the first to rip off Google, Apple (NASDAQ:AAPL) and other tech innovators. The onslaught of fancy MP3 players after the iPod - laughable. Every smart phone using a touchscreen after the iPhone - comical. The emergence of the "tablet market" after iPad - ditto. I'm not sure if anybody has an original idea anymore. I need to learn more about how patents and such work because I am shocked that Apple does not file more lawsuits. Instead, everybody else seems to sue Apple for being better.

Maybe this shamelessness has been going on since the beginning of time, I don't know. What I do know is that when I was a kid and I upgraded from my Atari to a Nintendo (OTCPK:NTDOY) game system (that was at least my trajectory), it seemed that Nintendo really improved on things. It didn't just repackage the same old features from what came before it. The same goes for my transition from the Commodore 64 to whatever I got next. And the iPod didn't just piggyback on the biggest name to come before it -- Sony's (NYSE:SNE) Walkman -- it revolutionized the gadget industry. And as it "Shuffles" and "Touches" and "Airs," Apple continues to improve on what came before it, even if it is what came before it.

My mix of disdain for Microsoft's "innovation" and happiness over the utility of its most recent offerings prompted me to take a look at the stock. While I don't get incredibly excited about the prospects of investing in Microsoft, if I stick to rule number one in investing - remain emotionally detached - I need to give it a fair shake. And, if you do that, you'll see, whether Microsoft is at its innovative best today or not, it might be a good time to go long.

(Chart courtesy of Schwab's StreetSmart Edge)

Click to enlarge

On the six-month daily chart, MSFT looks impressive and potentially ready to break out. As I noted in a previous Seeking Alpha article, I use a Williams %R/MACD combination as one way to generate signals in both my short- and long-term trading. As MSFT butts up against its 50-day simple moving average, both indicators appear headed in the right direction. Start here for an overview on how to use Williams %R and MACD in your trading. If MSFT can break through its 50-day SMA, it might be time to consider going long.

If nothing else, MSFT serves as a pretty sound value play right now. Its P/E stands at just 11, according to Yahoo Finance, and it pays a dividend of $0.64 per share for a yield of 2.4%. While I obviously have concerns over the company's lack of original innovation, it remains a titan. And it's surely not the only company to rip off the new leaders and get away with it. Maybe one day, Microsoft will actually make material changes to what came before it and offer something wholly original in the process. At that point, it starts anew with a fresh relevancy and really takes off. Other than Apple's leaps for mankind, it will be the first time it has happened on a large scale, since Bruce Springsteen helped put Manfred Mann on the map.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.