Microsoft Corp (MSFT)

A big believer that the large-cap technology companies essentially reinvent themselves to become more shareholder friendly. They generate a lot of money, so they are more than willing to buy back stock and to increase the dividend. If you own for the dividend, this is very safe. This needs to break out of that range where it is no longer just a stable bricks and mortar technology company but go back to the days when it was a higher growth. The Windows operating system is the biggest franchise and they put their cash from that into things like Xbox, Bing and their service and tools business. If they can keep those parts moving and growing, the valuation will continue to move higher putting the stock somewhere up in the $40 range.

Has done exceptionally well in recent months. Very healthy yield of about 3%. There are a few opportunities here, but most of them have started to reflect themselves inside the share price. The gaming console was once a small component part of their business but is now becoming a major part. There is also a new console expected in the next couple of weeks. There is still a wide runway for the commercial adoption of Windows 8.

Have some great businesses for the enterprise which continues to grow and throw off lots of cash. Will be getting a new CEO, which he thinks is important for the company. Great yield of 3.3%.

This is one of those charts that is not easy to read. Traditional technical analysis would say that there would be support at old resistance, which it more or less did at around $30. However, the last part of this year has shown a series of lower highs but definitely finding support at around $30. This is not going to be an easy trade off of the charts. You really have to believe in the fundamentals of the company. In the short term, it is a Trade, but any time it gets around $31, it is a screaming Buy.

Once a company starts to pay out a dividend, the growth of the company is pretty much over.

Have a dividend of $0.28 per share, which is 3X what it was 3 years ago. They have $75 million in cash and have announced a bunch of buybacks but he doesn’t think that’s what they should be doing with the money. They should get rid of the Bing search engine, which is not working and costing a lot of money. They should also raise their dividend. If you want a greater return, he would look elsewhere. He is not the least bit interested in this name.

Had a pretty good quarter a couple of quarters ago and people got excited. That fizzled last quarter. Thinks market will have a wait and see approach.

Had a tremendous run up, 25%+ year to date. Likes that they are giving money back to shareholders in the form of dividends. Put the dividend up 22% and are buying back stock which he thinks they should be doing. Looking out over several years, they generate a significant amount of cash flow, which can be reinvested into things like Xbox, servers and tools, online gaming franchise and they can broaden out their offering. If it got back down to the $30 range, he would be interested in it.

Fairly non-cyclical. You will always get good pockets of growth. But this one is stagnant. Nokia was not a good idea. He is concerned with the 10s of thousands of employees they just picked up. They are challenged and it is well known they are. Sees a low level of growth. 3% dividend. Be prepared to hold it for 3 years after the new CEO turns things around.

Had a succession of problems and a stiff breeze in their face. They failed on a variety of new innovations, such as tablet, phone, PCs. Not a growth area.

(A Top Pick August 23/12. Up 6.38%.) Has pared some off his holdings. Businesses are going to have to go through a cycle upgrade whether they like it or not so he is still holding. Great dividend. He can see $40 in the next 12-18 months.

Likes stocks that are trading at less than 15X earnings, 10X pre-tax earnings and close to 10% free cash flow with beautiful balance sheets. This has all of these factors with a wonderful installed base. A lot of risk. Hasn’t made it with the devices, there are worries about some of the software but, at the end of the day, it is spinning off a ton of cash. Earnings are growing every single year. Thinks they have a smart activist investor who is pushing for changes.

Thinks this one is dead money forever. They have no presence in smart phones or in tablets. They have a product, but it doesn’t sell. The desktop is disappearing. This is going to show up in their financials eventually. Coming out with things like Xbox which will which will give them a temporary boost in earnings in that division. He wouldn’t ever own this one. Thinks they should buy BlackBerry (BB-T) and that they will. It would give them an established presence with a proven brand.

Sold some a couple of weeks ago. Windows 8 was a disappointment and they are doing a bit of a shuffle. Great long term hold.

Has done fairly well over the last little while and he is not quite sure why. New products and upgrades have not done well but there seems to be renewed interest in this stock. There are many others in this space that are trading at as attractive a valuation but have much, much more visibility and solid fundamental growth prospects.