Microsoft has also made a series of bold acquisitions in recent years including:
aQuantive: Microsoft purchased the search marketing firm for $6.3 billion in 2007. However, the company wrote off nearly the entire investment last year due to worse than expected performance.
Skype: Microsoft purchased the on-line telecommunication company to boost its enterprise collaboration business. However, with a $8.5 billion price tag, it’s still unclear if this acquisition will provide a return for investors.
Yammer: Microsoft bought the internet start-up for $1.2 billion last year to bring social network features to its suite of business applications.
Given Microsoft’s massive R&D spending, returns for shareholders have been disappointing as management has consistently missed the biggest trends in technology industry.
In contrast, rivals have achieved vastly better results. With relatively little investment, Apple Inc. (NASDAQ:AAPL) has managed to disrupt several industries including music and mobile while nearly inventing the tablet space. Google has posted remarkable returns for shareholders by dominating search and creating the most popular mobile operating system in the world.
Clearly the market agrees. Since 2006, Microsoft investors have earned an underwhelming 2.3% annualized return.
Microsoft is one of the cheaper names in the large-cap technology space and the stock is a regular favorite of value investors. The stock is trading at just over nine times forward earnings and cash represents over 20% of the company’s market capitalization.
Is it a good bet? The shift from PCs to tablets and smartphones is starting to erode the company’s lucrative cash cows. While the company is slowly expanding to new businesses, this shift doesn’t represent growth but only a transition.
The article The Microsoft Story in 10 Charts originally appeared on Fool.com and is written by Robert Baillieul.