Microsoft (NASDAQ:MSFT) is a solid undervalued long-term investment on the market that could increase significantly in stock price within the next few years. Microsoft has innovative technologies on the horizon to regain its leadership in the tech sector once again.
Microsoft is also forming powerful partnerships with industry leaders in order to compete with Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) as the tech industry evolves. Its expansive influence in multiple industries along with its proven success for decades from increased capital and revenues makes Microsoft one of the most favorable investments on the market. The stock price has been relatively flat for some time, but Microsoft is making plans that could certainly double, if not triple, its stock price within the next four years. Microsoft is clearly undervalued at its current stock price of approximately $30 per share; this is an opportune time to invest in Microsoft now before the price increases to reflect its true value.
Its stock price has ranged from around $23 to under $33 for the past year. Microsoft has increased revenue to over $55 billion, which is a 6% increase from last year. It is essentially free of long-term debt and has a significant amount of capital as well. Microsoft has increased earnings by over 9% from 2008 into 2011. A net income margin of 30% from 2008 to 2012 also shows promise and sustainability, despite the flat stock price. Microsoft has a market cap of over $250 billion and dividend yield over 2%, even without the innovations and advantageous partnerships on the horizon; this is a promising long-term investment as the current stock price.
Microsoft has promising plans to edge in on the competition's main sources of income by utilizing and further developing its current platforms. Microsoft is also focusing on evolving its own products in order to expand its potential in the growing communications, social networking and information era. Specifically, Microsoft is targeting Apple's dominance in the tablet and e-reader markets, as well as Google's prominence as the premier search engine on the internet. Microsoft also has innovative plans for Skype that will surely make it the leader in the communications and videoconferencing industries as well. Xbox also continues to show promise as a potential catalyst for increasing revenue as a subsidiary in order to increase market share for other Microsoft services in various industries.
Microsoft is set to release a new version of Bing that will compete and pull more market share from the dominant Google search engine. The new version of Bing offers a clear and concise three column format to enable internet users to search the internet in the traditional manner driven by algorithm, provide instant results including maps and reviews in a platform called Snapshot and it will contain social networking results in a sidebar as well.
Research shows that the popularity of social networking has grown at an exponential rate. Around 90% of internet users consult friends over experts before making final decisions. Microsoft will capitalize off this growing interest with the help of Facebook by providing a non-intrusive interactive sidebar that is driven by Facebook friend and Twitter results. The sidebar will have the functionality of Facebook without the overwhelming presence of Google + on every search result. The ability to choose and separate the results may be a decisive advantage over Google's current format. Creating a more concise comparable option to Google's format will certainly help Bing increase its current market share of internet users.
Microsoft is also focused on capitalizing on the growing tablet and e-reader market as well. Right now, Apple dominates with around 95% of the digital textbook market. Apple was able to sell approximately 350,000 units in just three days after it announced it would be selling digital textbooks through the iPad. Microsoft wants to capitalize on this growing industry, so it has formed a partnership with Barnes & Noble (NYSE:BKS). Microsoft has invested $300 million for 17% of an application that will utilize Barnes and Noble's Nook e-book in order to offer digital textbooks and compete with Apple in this promising $12 billion education industry. The growing tablet and mobile smartphone markets is the main reason that compelled Microsoft to revamp its OS for the new Windows 8 touchscreen user interface.
Amazon's (NASDAQ:AMZN) Kindle-only accounts for about 5% of this education industry, leaves plenty of room for Microsoft and the Nook e-book to form a strong position with tablet users that prefer Windows over Apple or Droid applications. Microsoft has a distinct advantage by offering a sophisticated and proven OS with office applications in comparison to its competitors. Windows 8 is receiving much of the same resistance as Windows 7 did, but most likely, consumers will eventually adjust in order to stay with Windows office applications. Microsoft is able to offer a more sophisticated and refined option for self-publishing through its already established office applications in comparison to Google's Android software. Microsoft continues to try to edge out competitors by becoming the sole OS and browser on choice tablets and mobile products.
The most promising venture on Microsoft's docket is the plan to make Skype the lead in the future of videoconferencing and communications. Microsoft is combining the technology from Skype and Kinect to create videoconferencing technology known as Telehuman. This technology will create 3D, 360 degree life size hologram chat between users.
This technology will make Microsoft the leader in the industry and change the way businesses and consumers communicate forever. This Hollywood effect is now becoming a reality through the work of Microsoft, Skype and researchers at Queens University in Canada.
Microsoft may also convince Facebook to use Windows 8 as the OS platform for the rumored and highly anticipated Facebook phone. It is also using XBOX as a bundle or discount incentive to promote many of the new products that will feature the new Windows 8 OS. Microsoft is making several aggressive moves across multiple industries to re-establish its place as the leader in the tech sector. A stock price of $30 a share is a steal right now, considering the quality of ventures Microsoft is involved in at this time.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.