With the current happenings in the world of IT and the impending release of Windows 8, Microsoft may be able to jump up and eventually keep at pace with its competitors. As it is, the publicly listed company is lagging behind giants like Apple, Samsung, and Google. However, since Microsoft is not seen to take a slice of the Android platform, developers are inclined to take the company as a possible alternative, especially since the Bill Gates firm is not in any way connected with the ugly fight for the Android market.
Microsoft had already taken a slice of the tablet pie by offering its own Surface tablet. Although its competitors are waiting for it to fail, stock market investors are waiting for the effect of Windows 8 release. As always, the pessimists believe that Windows 8 is a massive failure although it hasn’t even been released yet. But, investors will have to decide even before Windows 8 is released. If they don’t see any value in the new Windows 8 operating system, stock market prices will surely fall. Currently, the price has risen by as much as 19% this year but it failed in comparison to Apple’s 60% increase in the same period.
Experts are predicting that Samsung and Google will suffer losses in terms of market share and there’s a possibility that the new Windows 8 will rake in a conservative $8 to the company’s stock market price, which represents a 26% increase in share price. But with the impossibility of foretelling the future, no one really knows how Windows 8 will fare. However, there are signs that it will be the company’s best OS since Windows 95. Microsoft is also to set to conquer smartphones and tablets. Windows 8 is said to be the OS of choice for Microsoft’s Surface tablet and will compete against Apple’s iPad and similar devices from Dell and Hewlett-Packard.
Aside from the effect of Windows 8 on the company’s share price, it is also interesting to note that Microsoft has huge $29 billion free cash on its coffers. It is expected that the 2.6% dividend yield will also increase by fall. With this, the value of Microsoft’s share price and value will also increase. The free cash is really not unexpected because Microsoft does have large gross margins.
Recently, the company has received a lot of flak for its decision to write down a Quantive’s value by $6.2 billion. It can be remembered that the online advertising agency was bought by Microsoft for $6.3 billion in 2007. However, its purchase of Skype in 2011 for $8.5 billion may have been a better decision.
With about $70 billion in revenue and $22 billion in operating income for the 2012 fiscal year which ended in June, investors are expecting more than the usual 80 cents dividend per year. Therefore, with solid cash in Microsoft’s coffers, experts are predicting that even if Windows 8 doesn’t perform above par, the money generated by Microsoft due to its high gross margins is enough for investors to be confident about their earnings from the company’s stocks.