Microsoft (MSFT) seems like the most bulletproof tech blue chip out there, with its dominant Windows operating system and almost $88 billion in cash and investments.
However, the post-PC age is weighing on growth as Windows loses its edge — not to a competitor in desktops and laptops, but to mobile devices like smartphones and tablets.
Microsoft is aware of this and rushing to regroup, but it continues to lag painfully behind in mobile. Take, for instance, the fact that MSFT just sold off sharply after earnings thanks to a $900 million charge related to its Surface tablet.
Yes, the tech giant has slightly outperformed the market thus far in 2013. And yes, the price-to-earnings ratio is still a reasonable 10.5 based on fiscal 2015 forecasts.
But the risk of disruption and falling behind is severe. Microsoft is squeezing as much as it can from Windows and its Office software, but mobile trends and competition are clearly working against this stock.
Despite the 2.9% dividend, Microsoft is not as stable as you think.