I believe Microsoft (NASDAQ:MSFT) is moving in the right direction to raise its stock price and increase returns to shareholders. Microsoft is expanding its business into new, profitable sectors, and it is also taking advantage of the popularity of its competitors. For these reasons, I think Microsoft is a good company to invest in, especially for the long term.
Several analysts have bullish opinions on Microsoft, myself included. I believe Microsoft will see its fair share of growth in the next few years. Microsoft's historic stability, good fundamentals and relatively quick recovery from the 2008 financial collapse are all indicators that Microsoft is a safe company to invest in as well.
As I mentioned, Microsoft is expanding into segments of the business world it previously has not held much of a footing in. Microsoft has recently announced it is ready to try out a move to the healthcare field. This could turn into a whole new stream of revenue for Microsoft, as they find a way to use innovative software in the healthcare industry.
For starters, Microsoft announced a partnership with AARP to launch "AARP Health Record," which will be an online service that helps people over 50 manage their health. This new service will allow its uses to enter, store, and share their personal health information. The key to success will be the user's ability to access and share the information with family, doctors, and other healthcare providers in a convenient fashion. Users will also be able to track their progress on recovery plans and goals they have set.
Microsoft also announced the approval and formation of a joint venture with General Electric (NYSE:GE), going by the name Caradigm. General Electric's healthcare IT segment and Microsoft will attempt to enable healthcare systems and professionals to use real-time, organized information to help the quality of the care they provide. Caradigm will focus on creating better population health management, and improve the economics of the healthcare system by creating efficiency.
As personal health and obesity continues to become a major issue in the world, specifically in the US, the AARP Health Record could become extremely popular. Similarly, as the healthcare system in the United States continues to be of extreme importance, and healthcare costs keep rising, the joint venture between Microsoft and General Electric could create some much need efficiency gains, and lower overall costs to the healthcare industry. At a time when there is a huge emphasis on creating a healthy society and healthy individuals, I believe these opportunities could create huge amounts of brand new revenue for Microsoft.
Microsoft is also attempting to take advantage of the fast growing smart phone market. The Windows Phone mobile platform has recently surpassed 100,000 applications designed to use on the Windows Phone. While this is noteworthy, troubling for Microsoft is the lack of sales boost coming from the software, like products received from Google's (NASDAQ:GOOG) Android Operating System and Apple's (NASDAQ:AAPL) iOS.
With a small and decreasing share of the smart phone market in level of sales, Microsoft has substantial work to do if it wants to catch the leading smart phone producers. However, the giant technology company appears to be doing just that, as it is set to give a sneak peak to the newest Windows Phone "Apollo" later this month. Furthermore, Microsoft has also entered into an agreement with Nokia (NYSE:NOK) in which the companies will use Windows software and Nokia handsets to create another smart phone.
Although there is work to be done in the smart phone industry, Microsoft has the entertainment industry down pat. Microsoft released Xbox SmartGlass at the most recent Electronic Entertainment Expo. SmartGlass is an application that will essentially create a network between Windows 8, your Windows Phone, tablet devices, and other mobile devices with your Xbox 360. The goal of Xbox Smartglass is to create an overall more enjoyable, interactive gaming experience. Microsoft earns a lot of revenue from Xbox, a very profitable segment of the company, and I expect this to continue with innovative releases like SmartGlass.
Possibly the smartest move I've seen Microsoft make is its preparation to release the first ever version of the Microsoft Office software for Apple's mobile devices, both iPads and iPhones. iPads accounted for 97% of the tablet purchases bought by businesses last quarter, and Microsoft Office software availability will only raise the popularity of the iPad. As the iPad makes more sales, the Microsoft Office software that is compatible with the iPad will also make more sales - a sure revenue booster for Microsoft. However, there will be stiff competition, as the top-grossing application for the iPad last year was Google's QuickOffice.
Overall, I do not expect Microsoft to make significant gains in the smart phone market. The popularity of Android devices and the iPhone will make it very difficult for any other competitors to gain any market share. Even so, there is always an off chance Microsoft does make a break through in the smart phone industry, and it could bring Microsoft into a whole new level of business.
Microsoft has a storied history of stability and offers a decent dividend. Furthermore, it is in the process of entering the healthcare industry, which could lead to an efficiency overhaul and an entirely new revenue stream for Microsoft. I think this is a really smart move for the company, and I believe it will lead to great shareholder returns. I still see Microsoft as an attractive company to invest in now.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.