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17 Years Later, Microsoft Corp. Is Worth $500 Billion Again!

MSFT Market Cap Chart

Microsoft (NASDAQ: MSFT) is putting some pep back in its step these days. On Friday, Reuters pointed out that the software giant's market cap has risen above $500 billion for the first time since March 2000.

I'm all for celebrating neat milestones, including this 17-year benchmark. And it's no secret that Microsoft really is doinga lotof thingsright these days. Large-cap stocks don't post market-crushing 55% returns in two years for no reason.

That being said, I would like to argue that the Microsoft you see today is miles removed from the $500 billion beast you knew 17 years ago.

MSFT Market Cap Chart

MSFT Market Cap data by YCharts .

But wait, there's more!

Honestly, there's always more to say about a business as complex as Microsoft. I'm not here to write a book today, so let's keep this short and sweet.

Before I go, let me just point out that Microsoft has done a lot of growing up since the dot-com boom and bust. Trailing sales have nearly quadrupled, while free cash flows doubled:

MSFT Revenue (TTM) data by YCharts .

The company's dividend policy is just 13 years old, but now provides a decent 2.4% yield. And Microsoft's balance sheet was free of long-term debt 17 years ago, but that changed in 2009. The current statement of financial accounts has very little in common with the lean, low-capital version it wielded in 2000. Cash and debt balances have skyrocketed in recent years, and Microsoft has started amassing a generous chunk of plant, property, and equipment assets (PP&E in the chart below).

If I didn't know better, this almost looks like the balance-sheet antics of an industrial manufacturing conglomerate:

MSFT Net PP&E (Quarterly) data by YCharts .

Meet the new boss, not the same as the old boss

Any way you slice it, the rejuvenated version of Microsoft shares few characteristics with the older owner of a $500 billion market cap. The world has changed, the software industry never stops changing, and Microsoft is forever busy adjusting to new realities.

So if your opinions and investment thesis regarding Microsoft haven't changed in 17 years, I'm sorry to say that the company did not just hop in a time machine to skip the last 17 years. You'll have some reading to do if you want to keep up.

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Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool's Board of Directors. LinkedIn is owned by Microsoft. Anders Bylund has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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