Is Microsoft Corporation (MSFT) a Good Buy ?

Bullish supportive points

1). The already strong server and tools business to continue gaining share in an expanding market.
2). Microsoft’s Windows 8 launch provides a more cohesive strategy for its Windows OS franchise to compete with tablet and mobile devices.
3). The Azure platform has the potential to develop into a significant contributor alongside the company’s other cash cows.

Bearish supportive Points

1). The Windows OS business is declining due to a variety of factors including alternative devices, alternative operating systems, and the mix shift toward lower-priced, lower margin emerging-market sales.
2). The decline of the Windows OS business has begun the decoupling of the primary components of the Windows ecosystem as consumers gain comfort with alternative products.
3). The growth in Microsoft’s cloud-based products and services is likely to weigh on margins over the long term.

Risk

Microsoft’s flagship Windows operating system and Office productivity software suite are under assault from tablet computers, cloud alternatives, and OS X offerings from Google, Apple, and open-source providers like Linux.

Windows-based PC shipments have slowly eroded from approximately 95% market share a decade ago to 90% today owing to shifting consumer preferences and the rise of OS X and Android-based tablet computers and smartphones. With the release of Windows 8, the Surface tablet, and the pending release of the Nokia Windows phones, Microsoft hopes to reverse market share declines while establishing beachheads in the smartphone and tablet markets.

I believe the Surface and upcoming OEM Windows-based tablets are good first efforts and the inclusion of Office should help broaden the appeal of Windows tablets to traditional laptop users in addition to tablet users.

Ahsan Aslam Khan has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple and Microsoft.

The article Is Microsoft a Good Buy ? originally appeared on Fool.com and is written by Ahsan Aslam Khan.

Ahsan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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