Though Microsoft (FRA:MSF) has often been associated with „old tech,“ the reality is that the company is one of the world’s largest and most well-respected software companies. Its Windows operating system powers the vast majority of the world’s personal computers, with Net Applications reporting that nearly 92% of PCs use some variant of Windows.
However, while many investors tend to focus heavily on Microsoft’s Windows business, the company’s Office productivity suites, as well as its broad swath of server and cloud solutions, generate significant amounts of revenue and profit. And Microsoft continues to push into consumer-oriented hardware such as gaming consoles, smartphones, and tablets.
While it’s not clear how much money Microsoft will ultimately be able to make from all of these initiatives, many investors seem to appreciate that the potential here could be, in the long term, huge. With that in mind, it’s worth exploring the following question: Is Microsoft one of the best companies in America?
How has Microsoft treated investors?
One of the common complaints surrounding Microsoft stock for quite a while is that it had been — like so many of its high-flying peers during the „dot com“ bubble — „dead money“ for many years. A look at a 10-year chart of the company’s stock price tends to corroborate this view:
However, a common argument is that Microsoft, like so many of its „dot com“ peers, simply saw its valuation get ahead of itself, and that the relatively poor stock price performance is a result of the company’s fundamentals merely catching up with its valuation.
Indeed, during the years when Microsoft’s stock seemed to be going nowhere fast, the company not only saw its revenue and net income rise substantially, but also steadily increased its dividend. In 2005, Microsoft’s dividend per share was $0.08, but today, it sits at $0.28. At the same time, the company reduced its share count via stock buybacks.
While Microsoft’s stock price disappointed many during the last decade, the company continues to grow revenues, generate substantial profits, and — perhaps best of all — return large sums of cash to shareholders.
What about its customers?
In the consumer market, opinions about Microsoft’s ability to figure out what customers want are quite mixed. For example, Business Insider points out that „one of Microsoft’s strongest supporters,“ Paul Thurrott, called Windows 8 „a disaster in every sense of the word.“
Windows Phone, too, hasn’t exactly seen the warmest commercial reception. The Verge reports that Microsoft’s share of the smartphone operating system market was just 2.5 percent during the second quarter of 2014, suffering a 9.4 percent decline year over year during that period.
That being said, Microsoft’s financial results don’t lie: In its most recent quarter, the company saw year-over-year revenue growth in each and every one of its business units. For the full year, all but its „Devices and Consumer Licensing“ business grew, likely reflecting the weak PC market, which some blame on Windows 8.1. So, Microsoft must be doing something right.
Finally, according to a research report from Forrester Research (via MacRumors), claiming to measure „customer experience,“ Microsoft is now just ahead of Apple, on par with Samsung, and slightly behind Sony in terms of „customer experience,“ registering a score of 82, which indicates a „good“ customer experience.
Are employees happy?
According to Glassdoor, Microsoft scores a 3.8 out of five across 8,050 reviews, with 79% of reviewers willing to recommend the company to a friend. Further, of the 886 ratings of CEO Satya Nadella, 85% „approve“ of him.
Here’s how Microsoft stacks up to some of its peers such as Google, Oracle, Apple and IBM:
|Overall rating (out of 5)||% Approve of CEO|
Source: Glassdoor data.
Digging further into the Microsoft rating data on Glassdoor, it looks like the compensation and benefits is the best part of the job, with the respondents rating those, on average, a four out of five. The weak spot, according to the respondents, seems to be senior management, which gets a rating of only three out of five. Culture and values, work/life balance, and career opportunities came in between 3.5 and 3.6 out of five.
While Microsoft isn’t the highest scoring in this (admittedly) small list, it does pretty darn well. It seems to me that employees are pretty happy at the company.
Does Microsoft do good for the world?
Microsoft is a very large company and employs more than128,000 employees worldwide. Further, given the sophisticated nature of the products that the company develops, it creates plenty of jobs for scientists and engineers.
Interestingly enough, in addition to allocating its research and development might to developing products intended to generate revenue, the company also conducts advanced, but perhaps less immediately commercially applicable, research through its Microsoft Research division.
Finally, Microsoft appears to put quite a bit of resources toward helping the environment. In an interesting infographic found on Microsoft’s website, the company states that it has reduced its „carbon footprint from travel“ by 30,000 metric tons during the last seven years. It also claims to invest in renewable energy projects, and it has 2,288 solar panels at its Mountain View, CA campus.
Foolish bottom line
Microsoft, like any other company, has its plusses and negatives. From the Glassdoor ratings, it’s clear that there are some things that employees would like to see improved. Further, the displeasure with Windows 8 and 8.1 still seems pretty widespread, even as Microsoft takes steps to improve the operating system.
However, it is a cash-generating machine, employees seem quite happy, on the whole, particularly with the new CEO, and the stock — through a combination of dividends and share price appreciation — has done very well for investors during the last few years.
Bis zu 130 Mrd. US-Dollar investiert Investorenlegende Warren Buffett in nur ein einziges Unternehmen. Das zeugt von riesigem Vertrauen in das Zukunftspotential.
Buffett hat so einige Mega-Milliardeninvestments in seinem Portfolio. Wir haben sie näher analysiert, und angesehen, inwieweit sie sich zum Nachahmen eignen.
The Motley Fool recommends Apple. The Motley Fool owns shares of Apple, International Business Machines, Microsoft, and Oracle.
This article was written by Ashraf Eassa and originally appeared on Fool.com on 19.9.2014.