Is Microsoft on the Decline?

Just as the competition winds down, news about a very famous company and its stock is released. Yesterday there was an interesting article regarding Microsoft. Despite the company seeing a growth in earnings (actually about a 31 percent increase in earnings, exceeding analyst estimates), Microsoft shares still fell. It seems as if the "boom days" (as the article mentions) are dwindling for this software giant. The main reason for this, according to the article, is that revenues in the division that includes Microsoft's foundation, the Windows operating system, declined from the same time last year for the second-straight quarter. This is due to the fact that people are buying fewer PCs which run the software. In addition, a main rival, Apple, has had great success with its iPad. On the other hand, Microsoft has been slower and less successful in the tablet market (which currently depends on rival operating systems made by Apple and Google). Even their partnership with Yahoo has not produced desirable results. Microsoft's technology is producing less revenue per search than expected. This trouble forced Microsoft into paying Yahoo extra money during the quarter and may have contributed to a slightly larger operating loss in the online operations than the same time last year. Overall, Microsoft is struggling more now than it often has in the past. Is this a reason to be concerned? It might be. However, Microsoft is not finished. Anyone holding their stock should take a holistic approach when examining if it is time to sell. Remember that if the original reasons that you used to purchase the stock (if based on a solid strategy that takes the long run into account) still apply, then it is wise to hold on to the stock. Think carefully and avoid seller's remorse.


http://news.yahoo.com/s/ap/20110429/ap_on_hi_te/us_earns_microsoft

Value Stock ... Or Not?

When Nike was at $87.50 on December 22^nd, 2011, I thought I had bought a value stock. It had dropped a few percent (5.8), and I thought it was a good time to buy before the spring season starts. With my love for the brand, I bought it immediately without taking much consideration. Looking back, I had not made the right decision.

I started to realize, just because a stock goes down heavily, it does not mean it will find its way back up.

I should have looked at previous performance, Nike was actually coming down from its peak earlier in December. It was almost twenty dollars higher (per stock) than it was in June (all-time high).

Then I realized Nike did not have much potential in the coming months. Nothing exceptional was due out that can stimulate the stock up.

If a stock crashes, it might happen again.

So after all that, I had decided to sell, but that quickly changed. On March 18^th, just went we’re hinting at the top three of the competition, Nike took over a 9% fall. With over 15% of our equity invested in it, it brought our whole portfolio down. We did not know what to do, as we dropped to 8^th place and were down almost $20,000 on one stock. Looking more in depth at this sudden fall, it was all due to cost of inputs for the 2012 fiscal year. They were worried about the margins of profit. Everything else was up including orders all over the world, sales in the quarter increased seven percent, and consumers were predicted to spend more money on sports apparel than last year.

The futures number “indicates a healthy business,” said analyst Sam Poser of Sterne Agee. “But margin pressures cast a shadow.”

With much more thought this time around, we decided it was safe to say, that we further invest in Nike. We were correct this time, or at least until today. We cut the twenty thousand dollar hole in half, and are thinking about selling before another major crash. Moral of the story, do not buy a stock once it declines. Look into why, and its past trends.

Saagar Gupta, Yo Investments

– (Source: http://bit.ly/gPyhQI)

Cautious Optimism?

Amid all the negativity, there seems to be reason for some optimism. Companies have increased their dividends by a record amount in the first quarter. According to the article, 117 companies in the S&P 500 index said they would raise or start paying dividends. The value of the new and raised annual dividends announced by these companies adds up to a record $16.6 billion. Only 78 companies raised their dividends in the same period a year ago. This is a good sign for the economy. Many companies have avoided or reduced dividends in the past few years. Now they have renewed confidence in their shareholders and are rewarding them with dividends.Companies who have never issued dividends, like CISCO, Kohl's,and WellPoint, will now do so. In addition, some companies have increased their dividends(for more info check the article). However, this news should still be taken with caution. Even with the increases, quarterly dividends by companies in the S&P 500 are 13 percent lower than their peak in 2008. A few companies that increased dividends don't pay as much as before the recession. Dividend yields are also down for companies, especially those in the financials sector.

Overall, the news seems uplifting-especially when considering all that the market, the economy, and the world has endured in the last two years (and even last two weeks)-yet we should still be cautious. Many stocks are still facing rough periods and the economy is still very fragile. But the increase in dividends does bring in another option for investing: choosing companies based on dividend and dividend yield. Any opinions on this or any alterations in your portfolios?


http://finance.yahoo.com/news/Dividends-come-roaring-back-apf-1317489474.html?x=0