by Ingrid Hendershot, editor Hendershot Investment
Founded 38 years ago, Microsoft (MSFT) helped launch the first great wave of an information technology transformation; it remains the world's largest software developer with sales topping $73 billion in fiscal 2012.
Throughout its history, Microsoft has achieved success by taking a
long-term approach to technology investments. In fiscal 2012, Microsoft
invested $9.8 billion or 13% of revenues on research and development
with much of that devoted to cloud technologies.
Cloud computing links the computing devices people have at hand to the
processing and storage capacity of massive datacenters. Microsoft's
solutions will bring the benefits of the cloud to the billion people who
use computing today and the billions more who will gain access to
digital technology for the first time in the years ahead.
[Related -Microsoft Corporation (MSFT) Earnings Preview: What To Watch In Q2 Results?]
Microsoft believes the impact of cloud computing will be as big, if not bigger, than the previous waves of technology change.
research is paying off as people increasingly choose Microsoft cloud
services including Office 365, Windows Azure, Xbox LIVE and Skype.
Microsoft recently unveiled Xbox One, an all-in-one gaming and
Microsoft reported excellent fiscal third
quarter results with revenue increasing 18% to a record $20.5 billion,
generating a 19% increase in net income to $6.1 billion. Growth across
all business segments led to this high double-digit growth.
[Related -Microsoft Corporation (MSFT): Good Buy or Good-Bye?]
generates exceptional cash flows with the company's trailing 12-month
free cash flow topping $27.5 billion, representing a nearly 10% free
cash flow yield based on the company's current market capitalization.
Microsoft has returned $9.8 billion to shareholders through stock
buybacks of $4.3 billion and dividends of $5.5 billion, an 18% increase
over last year. The dividend currently yields a solid 2.6%.
strong balance sheet boasts more than $74 billion in cash, which
provides the company with the financial flexibility to continue to
handsomely reward shareholders while investing in future growth.
is a high-quality market leader generating exceptional cash flows with
substantial cash returned to investors through growing dividends and
share buybacks. Buy.