My first contribution to the board! I believe MSFT is better as a trading vehicle than a long term buy and hold. It hasn't seen 400 billion market cap since 2000, and at that time, it was heavily overvalued. In 10 years, they've added nearly $10 billion in cash and marketable securities. They have also maintained positive double digit EPS growth. The market capitalization has been cut in half. They have also finally turned the money losing XBox franchise around--although, I don't agree it's the DOMINANT force in gaming (I also believe Project Natal to be another gimmick that most gamers don't want). They are heavily involved in the enterprise. The .NET framework is a clear competitor to J2EE and has won over large contracts. SQL Server is still the third most widely used RDBMS. Microsoft's development tools and MFC libraries are still widely used. Although, with all the positives, there are still clear headwinds: Linux, open source software, Sony, Apple, and piracy. No one knows how technology will evolve and who will dominate. If someone told me Apple would dominate MSFT's market cap 10 years ago, I would have laughed them off. Wow, look who is laughing now! And no one thought IBM would ever have the resurgence as they did since the late 80's. But, now they are back as the dominant vendor in the enterprise and they are constantly remaking their image: what was once known for their hardware platforms, they have transformed into a services organization and now a software based one. It is hard to value MSFT. It has definitely lost its major growth engines. But, who knows. In 10 years from now, they could have the next hottest thing ala Apple, or they could be a has been in a commoditized space like Intel. I say it's better to buy MSFT at mid to low 20's, sell at upper 20's to low 30's. Repeat ad nausea.
