Every day there are numerous stories, articles and blogs about how Microsoft Corp. (NASDAQ: MSFT) is in trouble because its search and advertising models cannot compete with Google Inc. (NASDAQ: GOOG). We hear that Microsoft is so far behind, and so inferior, that it might be in a quagmire from which it can't escape. In other words, Microsoft has become stodgy and passe'.
Steve Balmer, the Chairman and chief advocate for Microsoft exclaims constantly that this is not true and the world is blind to the power of Microsoft -- "just you wait and see!" He appears exasperated every time the comparison comes up and the question is posed as to how he will compete with the Google onslaught.
My first two posts on this site last year were about Microsoft and Google. I was thinking about last year and decided to look back and see how the year unfolded for the two companies. Here are the surprising results. Microsoft actually was the better stock investment over the last 12 months, rising about 35% to Google's 26.5% (25% better). It does not appear that Microsoft investors have been suffering all that much!
Furthermore, MSFT is paying a dividend and GOOG is not. I would also argue that Microsoft, while not a bargain right now, is fairly valued and that Google is at least 10% over-valued on fundamentals despite a spectacular earnings report. From my perspective, given the risk factors inherent in the younger Google, it may be even more over-valued. Certainly its stock price would suffer more on an earnings miss.
This just goes to show you that all the noise in the market place is just that -- a lot of noise, because Microsoft is doing just fine. I do not own shares of either stock and have never held any position in either, but if I was to buy one today it would be Microsoft, it is the better value and safer bet after months of market appreciation.
Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.
Sheldon Liber is the CEO of a small private investment company and the vice president for design and research at an architecture & planning firm. Check out his other posts for BloggingStocks here.
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Reader Comments (Page 1 of 1)
5-24-2007 @ 5:07PM
brenda said...
Sheldon Liber shame on you as i believe you did disclose some time back when i bothered reading one of your blogs that you of all people bought an "over valued" young puppy called Intuitive Surgical and i wonder if we did a comparison with another stock with your stock what would you do!!!!!! I bet you would not have bought intuitive surgical soooooooooooooooooooooo you don't own something and you know you have always been a bear with gooooogldelicious why are you betting?????????????? and please you are betting. Sincerely, brenda. Oh and short term/long term you did not discuss.
5-24-2007 @ 5:37PM
Sheldon L said...
Brenda,
Although we cannot agree, thank you for taking the time to comment. I do own Intuitive Surgical (ISRG). I did compare it to other companies, long and short term. ISRG has beaten GOOG ever since Goog went public. While the difference between MSFT and GOOG is only 25% over the last year, and GOOG would be ahead of MSFT from the day of the IPO, I can only comment from the time I have been tracking them.
As far as ISRG goes since you brought it up,ISRG has advanced 300% more than GOOG if you would have bought both on the day of the GOOG IPO. ISRG has been by far the better investment.
That said, those that bought GOOG at the IPO or shortly after still did fantastic, no denial, but in the last year Microsoft was the better bet.