Microsoft (MSFT) has been getting whipped by the bears for a decade. Is it time to take another look at it?
Microsoft has been making some sound strategic decisions lately.
You can argue it overpaid for Skype, but it got leadership in voice over IP, a real franchise and not just a technology. All voice is going to be VOIP, and Microsoft can now integrate it with all its platforms, and in many different ways.
Microsoft's Nokia deal was laughed at, but it sure paid a lot less to get into smartphone manufacturing than Google (GOOG) did.
You can argue that Microsoft Windows looks tired next to Apple's (AAPLO operating system, but with more and more applications going to the browser, is there a real desktop difference?
You can argue that Microsoft's Azure cloud violates the first cloud rule (it should be open) but it leads its huge installed base into the next decade's technology platform. The game is profit, not pleasing the gallery.
Seth Klarman of the Baupost Group has been loading up on Microsoft all year, and it now represents 13% of the fund's portfolio. That's a good indication a bottom has been found.
As a tech reporter with a bias toward open source I have criticized all the moves listed above. But here at Seeking Alpha the idea is not to do right by anyone other than the investor. Has Microsoft done right by investors in 2011? Might there be a payoff in 2012 and beyond?
The answer has to be yes. Microsoft faces stiff competition from Linux in the server world, but it has a strong place there. It is trailing Google badly in smartphones, but its legal department is taking a bite out of every Android sold. Microsoft is a big winner in enterprise computing, but it has a play for customers to move toward the cloud seamlessly.
Best of all, Microsoft has the government off its back. One shouldn't underestimate the value of that. The antitrust struggle caused every Microsoft planning meeting to be filled with lawyers and flacks for years. It slowed the company down dramatically, everywhere.
Now the case is over, and while Microsoft has been weakened it has not been divided. Microsoft retains its broad technology focus, with plays in video games, in Internet services, in operating systems, in applications, in the enterprise and the cloud, even in open source.
If you looked at Microsoft a few years ago you would have seen a lot of problems. Now you can look at it and see lots of opportunities. Opportunities to profit from Internet services and grow its Internet footprint opportunities to integrate voice and data, opportunities to connect its divisions in new ways and lock-in big customers for many years.
With the focus of government attention now on Google, and maybe Apple, Microsoft now has a chance to grow. It has market franchises to grow with, and it's still the king of cash,
CEO Steve Ballmer has been butt of jokes for many years, but is it possible he'll have the last laugh?