Stay Away from MSFT Stock
By Adam Benjamin
Microsoft (MSFT) has had a good run this year, outpacing the market for a 36% gain. But with Christmas and New Year’s around the corner, the real question is what 2014 has in store for MSFT stock.
Despite the stock’s performance this year, and the apparent progress MSFT is making in the tablet and smartphone spaces, Microsoft stock is not a buy for 2014. Here are the top reasons to stay away from MSFT stock:
Declining PC Industry: The PC industry is steeped in a rapid decline at this point, and considering that MSFT makes the majority of its money in that sector (half of it from Windows licensing), that’s bad news for MSFT stock. Nor is it clear where the company is going to make back that money. Microsoft’s market share in the smartphone arena is growing, but Apple (AAPL) and Google (GOOG) still dominate the industry’s profits. And the company’s progress with tablets has been too slow, too unsteady to count on as a real revenue generator.
CEO Shakeup: MSFT is getting a new CEO in 2014, and while that might be a good thing for the company in the long-term, it will probably mean a more volatile stock in 2014. When new CEOs come in, it’s easy for investors (and analysts, and anyone else with an eye on the stock) to get jumpy about new changes, which can quickly knock MSFT stock in either direction. But until those changes result in stronger fundamentals for the company, any upward spikes can just as easily come crashing down.
MSFT stock isn’t necessarily doomed in 2014. And if you already own the stock, the 3.1% dividend probably makes it worth holding on to for now. But long-term industry headwinds and more immediate consumer challenges should keep new buyers away from MSFT stock.
As of this writing, none of the contributors held a position in any of the aforementioned securities.