If you wanted to get online, chances are you did it through a computer that ran Windows. But Kent Walker, Google’s president of global affairs, said there were big differences between the Microsoft of the dot-com boom and today’s Google. Back then, Mr. Walker was deputy general counsel of Netscape, the commercial pioneer of internet browsing software, which was the main target of Microsoft’s campaign to hobble competition. The Microsoft trial, which began in October 1998, spanned 76 days of testimony over more than eight months. The New York Times reported on the proceedings daily. What’s a share of Microsoft stock really worth, then?
Microsoft is, by far, the largest software vendor in the world, and it’s no surprise that this is the strongest part of the company’s business. Bankrate follows a strict
editorial policy, so you can trust that our content is honest and accurate. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. Our mission is to provide readers with accurate and unbiased information, and we have editorial standards in place to ensure that happens. Our editors and reporters thoroughly fact-check editorial content to ensure the information you’re reading is accurate.
Microsoft’s Challenging Week: Legal Scrutiny in EU, Teams Outages, and Security Enhancements for Windows 11
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data. The Microsoft case also had a huge personal dimension because of the stature of Mr. Gates. He was the world’s richest person, and during the course of the trial, as the stock market surged, Mr. Gates’s stake in Microsoft soared to $100 billion. In 1995, a researcher at the Massachusetts Institute of Technology built a website, called the Bill Gates Personal Wealth Clock, to track Mr. Gates’s net worth.
Committing to holding the stock for three-to-five years is important. You’d hate to have to sell the stock when it’s near a low only to watch it rebound much higher after you exited the position. By sticking to a long-term plan, you’ll be able to ride out the ups and downs of https://1investing.in/ the stock. Alongside Azure, the success of Microsoft’s productivity programs diversifies its position in AI and bolsters its long-term prospects in the sector. Tech stocks fell out of favor in 2022, with the Nasdaq-100 technology sector index plunging 40% throughout the year.
Analyzing a company’s competitive position and financials is probably the single hardest part of buying the stock, but it’s also the most important. The best place to begin is with the company’s Form 10-K, which is the annual report that all publicly traded companies must file with the SEC. It seems like Microsoft is everywhere these days, and it goes beyond just office productivity software at this Washington-based technology company. In addition to its Windows products and Xbox games, Microsoft owns communications app Skype, social media site LinkedIn and recently announced plans to acquire video game maker Activision Blizzard. Any estimates based on past performance do not a guarantee future performance, and prior to making any investment you should discuss your specific investment needs or seek advice from a qualified professional. We are an independent, advertising-supported comparison service.
Google Antitrust Trial
However, easing inflation and excitement over developing industries such as artificial intelligence (AI) have made Wall Street bullish about tech again. When the Microsoft trial started, it was the high tide of early internet euphoria. E-commerce was just getting underway, and every industry wanted to jump on the digital bandwagon. The first Blackberry, essentially an email device, was introduced in 1999. The iPhone, which started the smartphone era, didn’t arrive until 2007.
After you’ve opened your account, you’ll want to fund it with enough money to buy Microsoft stock. But you can take care of this step completely online, and it’s simple. In addition, rather than just committing a one-time sum of money to the stock, consider how you can add money to your position over time.
With its hands in so many businesses, Microsoft has rivals large and small across many sub-sectors. At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict
this post may contain references to products from our partners. But the price of a stock and the value of a stock are two completely different things. The price is simply the price at which the last transaction in Microsoft stock took place, while the value depends on the earnings power and future prospects of the company. To quote Warren Buffett, “Price is what you pay. Value is what you get.”
Growth & Valuation
That’s a bit higher than where Microsoft trades today. The annual report is a great first step at finding out about the company, but you’ll want to do more than this. You’ll want to study what other companies are doing to compete because it’s important to have a broader perspective on the industry.
Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The consumer side of Microsoft tells a different story. Software licensing makes up the bulk of revenue and gross profit, but this part of the business actually declined in 2014, down about 1%. That’s a far cry from the mid-single digit growth on the commercial side of the business. A few important insights can be garnered from this data.
Apple Really Is a ‘Warren Buffett Company.’ Why Investors Should Admire iPhone Launch.
You’ll want to select a broker that caters to your needs. If you’re buying a few stocks but investing mainly in funds, then a number of brokers specialize in offering commission-free trading for those funds. If you’re investing in individual stocks, you’ll likely want to keep the percentage of any single position between 3 and 5 percent. This way you’re not heavily exposed to one investment breaking your portfolio. If the stock has more business risk, then you might choose an even lower percentage than this range. As one of the largest companies in the world, Microsoft has the kind of financial and market dominance that most companies can only dream of.
- An appeals court upheld most of that decision but was skeptical of the government’s preferred remedy — breaking up the company.
- Different interpretations of future growth prospects could lead to radically different results, but being able to come up with a conservative estimate based on realistic assumptions is an important skill to have.
- We follow strict guidelines to ensure that our editorial content is not influenced by advertisers.
- Although the legal theory advanced by the Justice Department mirrors the one used in the Microsoft case, the outcome of the trial will hinge on the evidence presented to Judge Amit P. Mehta of the U.S.
Steve Lohr covered Microsoft’s antitrust trial in the 1990s. Discounted offers are only available to new members. Create a list of the investments you want to track.
Data are provided ‘as is’ for informational purposes only and are not intended for trading purposes. Data may be intentionally delayed pursuant to supplier requirements. In 1996, it entered the media business in a partnership with NBC, setting up the cable channel, MSNBC, and a website, msnbc.com (Microsoft shed its stakes in both, years later). About 90 percent of personal computers used Microsoft’s Windows software, the main gateway to the young internet, and Microsoft controlled the software and services that were featured on those Windows PC screens. In its lawsuit against Google, the Justice Department points to the Microsoft case and that company’s tactics in the 1990s.
Dow Jones Industrial Average, S&P 500, Nasdaq, and Morningstar Index (Market Barometer) quotes are real-time. This site is protected by reCAPTCHA and the Google
Terms of Service apply. We’d like to share more about how we work and what drives our day-to-day business. The average analyst rating for Microsoft stock from 41 stock analysts is “Buy”.
The offers that appear on this site are from companies that compensate us. But this compensation does not influence the information we publish, book value means or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you.
After the George W. Bush administration came to power, the Justice Department and Microsoft reached a settlement. The resulting consent decree prohibited Microsoft from imposing restrictive contracts, freed PC makers to load and feature other companies’ software and forced Microsoft to disclose more technical information. The average P/E ratio of the S&P 500 has historically been around 15, and if we apply this multiple to Microsoft’s earnings, adding in the net cash, we arrive at a fair value of about $47 per share.
- In 1996, it entered the media business in a partnership with NBC, setting up the cable channel, MSNBC, and a website, msnbc.com (Microsoft shed its stakes in both, years later).
- If you’re buying a few stocks but investing mainly in funds, then a number of brokers specialize in offering commission-free trading for those funds.
- Many of these programs now feature AI tools, bringing the technology to the masses.
- The price is simply the price at which the last transaction in Microsoft stock took place, while the value depends on the earnings power and future prospects of the company.
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services. In fiscal year 2014, Microsoft recorded a net income of about $22 billion, or $2.63 per share. On the balance sheet, the company has $63 billion in net cash, equivalent to $7.50 per share. The value of Microsoft is this excess cash, plus earnings times some multiple, which depends on the reliability and rate of growth of earnings in the future. Microsoft’s phone segment, created after the acquisition of Nokia’s phone operations, is currently a drag on the company’s earnings, and hardware like the Surface tablet and the Xbox One have had moderate success at best.
If you’re buying just a few shares then you’re likely best off sticking with a market order. Even if you pay a little bit more now for a market order, it won’t affect the long-term performance much, if the stock continues to perform well. As of September 2023 Microsoft has a market cap of $2.489 Trillion. This makes Microsoft the world’s second most valuable company by market cap according to our data. The market capitalization, commonly called market cap, is the total market value of a publicly traded company’s outstanding shares and is commonly used to measure how much a company is worth.
Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. Volatility profiles based on trailing-three-year calculations of the standard deviation of service investment returns. The leading beneficiary of the more open environment, Mr. Yoffie said, was an internet search start-up, with new technology and later a new business model. It was founded in September 1998, one month before the Microsoft trial began.
Foolish thoughts It’s easy to fall into the trap of being either overly optimistic or overly pessimistic on a particular stock. Microsoft has a strong business that continues to grow, but single-digit earnings growth is likely to be the best investors can hope for. A P/E ratio of 15, adjusted for net cash, puts Microsoft’s fair value at about $47 per share, a bit higher than where it trades today. Microsoft is certainly not the bargain that it was a few years ago, but it’s still a very solid company trading at a fair price. Valuing stocks is a very rough process, and there’s no real “right” answer. Different interpretations of future growth prospects could lead to radically different results, but being able to come up with a conservative estimate based on realistic assumptions is an important skill to have.
First, the commercial side of the business is larger and far more profitable than the consumer side. Selling software licenses to enterprise customers is by far the largest component of Microsoft’s gross profit, and the good news for the company is that this part of the business has been growing. In fiscal year 2014, commercial licensing revenue grew by about 6%, with gross profit growing by 6.5%.
We maintain a firewall between our advertisers and our editorial team. Our editorial team does not receive direct compensation from our advertisers. The investment information provided in this table is for informational and general educational purposes only and should not be construed as investment or financial advice. Bankrate does not offer advisory or brokerage services, nor does it provide individualized recommendations or personalized investment advice.