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