Investing in Microsoft (MSFT) for the Long Term

Microsoft (NASDAQ:MSFT) recently announced a solid earnings report (see conference call transcript here) which caused the shares to trade up to about $29.46 on January 27. Since then, the shares have dropped to about $27. I think Microsoft shares are attractive to start accumulating now and on any additional declines. There is a lot to like about MSFT shares. Earnings estimates are about $2.55 for 2011 and $2.76 for 2012. This gives MSFT shares a pe ratio of only about 10 times earnings. Compared to other software and technology companies like Autodesk (ADKS), which sell for much higher pe ratios, this is an attractive valuation. You can read more about why I think certain tech companies like Autodesk are overvalued here.

Microsoft has a huge amount of cash on the balance sheet of about $40 billion. This balance sheet strength will allow them to pursue growth opportunities in the future with new products and possible acquisitions and it will allow them to reinvest in their current product line with updates and improvements. Microsoft's dividend of 64 cents per share per year offers a current yield of about 2.4%

Rest of Story ...