Will New CEO Lift Microsoft Shares?
Microsoft ( MSFT ) may soon have a new CEO to replace Steve Ballmer, who has announced his retirement.
Reports late last week said the new holder of the top job will be insider Satya Nadella. That disappointed some analysts, who were hoping an outsider would shake up the former software leader and revive innovation. But the stock rose 2.6% Friday in big volume as the speculation was digested.
Nadella, a native of India, has been with Microsoft since 1992 and currently heads the company's cloud and enterprise group.
Microsoft has watched its PC and Windows Office businesses erode as users shift to cloud computing and mobile devices.
The company is also set to acquire the handset business from Nokia sometime this quarter.
Microsoft was a monster growth stock in the 1990s as the world shifted to the PC. But since 2000, the stock has gone no where.
Earnings growth has flatlined. EPS in fiscal 2013 ended in June was $2.72, identical to 2012. Analysts are forecasting a 1% decline in 2014 and an 8% increase in 2015.
Five-year annualized earnings growth is 11%. If growth has been slow, at least it's been steady. The five-year Earnings Stability Factor is 8 on a 0 to 99 scale with low numbers corresponding to stable earnings growth.
In the most recent quarter, EPS rose 3%, and analysts are forecasting a 20% decline in the next report.
The company has paid quarterly dividends since 2004, when it started paying 8 cents a share. It's now up to 28 cents, which works out to an annual yield of 3%.
The stock has fashioned a double-bottom base with a 37.72 buy point. It broke above that Friday on volume 133% above average.
It fell below the buy point Monday amid a general market sell-off. It closed at 36.48 Monday, down 1.36.