Microsoft Corporation (NASDAQ:MSFT) has thrived over the years as a result of its cash-cow operating system and office software, each of which brings in more than a quarter of the company’s overall revenue and together account for all of its profits. Yet with the decline of the PC in favor of mobile devices, investors worry that Microsoft’s days of dominance may be numbered if it can’t adapt to changing technology trends, as Apple Inc. (NASDAQ:AAPL) and Google Inc (NASDAQ:GOOG) have captured huge portions of the mobile OS market as a result of their iOS and Android offerings, which now lead the smartphone market.
As a result, investors have looked closely at the recent release of the more mobile-friendly Windows 8 operating system and the Surface tablet. The original Surface got off to a slow start, but with the Surface Pro version having become available over the weekend to strong demand, Microsoft finally offers a full-blown tablet capable of running PC-style applications. The tablet may also boost Intel Corporation (NASDAQ:INTC)‘s mobile fortunes, as the Pro uses an Intel i5 processor, although short battery life concerns for the Surface Pro may raise questions about Intel’s capacity to provide power-friendly mobile processors.
As for Windows 8, it hasn’t been nearly the success that Microsoft had hoped. The operating system failed to bail out ailing PC manufacturers, and even though Microsoft said in mid-January that it had sold 60 million Windows 8 licenses, many of those were discounted upgrades that won’t necessarily produce huge amounts of revenue.
For retirees and other conservative investors, none of this arguably matters. So far, the Windows and business software divisions have managed to grow both sales and profits despite adverse trends away from PCs, producing huge amounts of cash that have led to higher dividends. With shares trading at a very reasonable valuation, Microsoft doesn’t need to be a big grower to give investors good value at current prices.
The article Will Microsoft Help You Retire Rich? originally appeared on Fool.com and is written by Dan Caplinger.
Fool contributor Dan Caplinger owns shares of Apple. The Motley Fool recommends Apple, Google, and Intel and owns shares of Apple, Google, Intel, and Microsoft.
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