Microsoft Corp (MSFT)

Gives you a pretty good attractive dividend yield and has a reasonable valuation when you strip the cash off the balance sheet. They are doing a good job of transitioning from a license-based model to a service-based model. Thinks there is really good momentum behind the name. Dividend yield of 2.83%.

They have done such a good job with their Windows suite really being everywhere. The margins are great. Over time they have built up so much cash so there are a lot of compelling parts to this company. It is a bit tough to call where it is going to go.

Recent earnings were not ideal and they really haven’t grown them over the last several years, so it is kind of a call on the new CEO righting the ship and refocusing away from their forays into other companies. They are focused more on what the world is going to look like going forward with Cloud Services, Office 365 and Windows 10 coming out. There is a refocus on what they are good at and a good vision of what the future’s going to hold. You could see multiple expansion if the earning start to grow. If you add that to some earnings growth, a couple of years out this will be a decent return. Dividend yield of 2.69%.

Closed down in the after hours. Ballmer really blew it by buying Nokia. You can’t compete against Apple (AAPL-Q) in the phone. They tried and they blew their brains out. The warning was telegraphed, so the market shouldn’t be surprised by this. This company has a perfect balance sheet with about $10 net in cash and the margins are growing. A company he wants to own and he can see it continuing to do wonderful things over time. Very cheap.

One of the older legacy technology names. People got excited when Nadella came on board and brought some hope. Recently they took a massive write down for one of the last deals that Steve Ballmer pushed through. Its core desktop and laptop businesses are slowly in decline. Probably a stable industry, but probably no growth. Doesn’t really have a mobile strategy. They have a good Cloud strategy. He would prefer Apple (AAPL-Q).

New management is doing such a better job than prior management and is starting to resurrect the value of some of their assets. They own the operating system for 90% of the PCs globally, and will continue to do that. Also, becoming a better play on the Cloud as well. You are getting all of this for a 16 or 17 multiple. They have a massive cash balance that they can use for further acquisitions.

(Top Pick May 26/14, Up 21.05%) iCloud had already started rolling out. He is hoping to hold for another year. They have lots of cash and are doing lots of stock buybacks.

Very interesting. In the early part of its existence it had a very fast growing balance sheet, which has slowed down quite a bit. It is now trapped between one of its support points and its FMV. The FMV is falling slightly, while the technicals are rising and the company is getting squeezed. Growth is slowing and not necessarily leading edge anymore. It may be about to take another step down.

(A Top Pick April 2/14. Up 5.5%.) This was a foray into technology and he still has a small position in this space, but has broadened his way out into a lot of security oriented software.

They still get almost half of their revenues from Windows and Office, and that is a business that he thinks will continue to be challenged longer-term. Doesn’t think this is a company that you need to own at these price levels. Cloud computing is a very competitive space. (See Top Picks.)

Oracle (ORCL-N) or Microsoft (MSFT-N)? Hasn’t owned this for years. Looking at their fundamentals, you will see that they are a very large company generating a good amount of cash, but are having trouble really gaining traction. Some areas of their business are doing well but not large enough to have any major impact on the business. The earnings really haven’t gone anywhere.

There is not a lot of growth in this company. They have a lot of cash, but she isn’t really interested in this name. If you are going to buy technology, buy something that has some growth. There is no visibility on how they are going to grow.

Earnings came out and the stock came down. Windows 10 is coming out. 3% dividend yield and 15 times earnings after you take out the cash. The Surface continues to be a big hit for them. MSFT-Q is the thing you want to own in a difficult environment. They have no debt.

Chart has a series of higher highs and higher lows and is tracking very well above the 200 day moving averages. Dividend of 2.6% is safe, and he sees it growing by 10% per year over the next several years. The new Windows coming out could be a catalyst for the stock. Valuations are getting a bit high because of the PE levels.

Very high free cash flow. The change in management has been welcomed by the street. They were favourable in capital growth and return. They will compete well in the cloud.