The various niches within the software marketplace are experiencing a strong threat of new entrants, and government regulation may well respond to Microsoft's position with anti-trust investigations as the company continues to "bundle" its software through arrangements with computer manufacturers. Clearly, however, one of Microsoft's strengths has been its ability to have others sell its products for the company, and it has no reason to abandon that strategy at this point.Foley, Mary Jane. "Microsoft Urges Customers to Plan Now for Windows 95." PC Week, 16 January 1995, 21-22. Finally, Microsoft should consider moving out of the personal computer arena and into other areas of software, including minicomputing and mainframe. The line between these levels of computing is blurred, and the expertise that Microsoft has, and the brand recognition, can be put to good use, perhaps with an Office2000 product which combines the features of Microsoft Office for larger systems. 1996 Annual Report. Redmond, WA: Microsoft Corporation, 1996. While there has been some movement in the stock during this two-month period, the stock has most recently remained steady between 130 and 140. The company does not pay dividends on its common stock, and price appreciation is the way in which investors must evaluate this investment vehicle. Upgrades and bug fixes will be necessary for Windows 95, but Microsoft should avoid introducing these changes too rapidly. Instead, the company should space these modifications so that consumers and developers can make the requisite adjustments. Once every two years or every three years would be appropriate for performance enhancements. Despite these figures, or perhaps because of them, the stock is currently selling at an exceptionally high price earnings ratio of 35 to 1, suggesting that Microsoft may be overpriced based simply on its financial position. However, given the dominant position that the company has within its industry, |
