Microsoft Corp (MSFT)

This is a core technology holding for him. Their movement from the desktop to the Cloud has worked out well. They put up a good quarter a short while ago, so they still have momentum. Not overly expensive. He would Buy this on a day when everybody is feeling negative on the market.

A very solid, profitable dividend paying stock, and a major beneficiary of the Cloud. Really solid balance sheet. This will continue to do well. If there is a pullback in the market, this will be a relatively safe hiding place.

It has its mojo back. It has moved back to 10 year ago valuation levels. They have new leadership that is quite impressive. He has reinvigorated it. We have not seen the affects of the new initiatives, so he would stay clear of it and go to some other tech offering for now.

(A Top Pick Sept 8/15. Up 33%.) He still likes this. A very well capitalized company. When you think of the transition to the Cloud, they have certainly done that more successfully than others. Feels they are going to continue to redeploy capital and be able to effect mid-single digit increases if not a single digit increase in earnings and cash flow.

(A Top Pick Sept 21/15. Up 34.2%.) Last year, people started to realize that this and Amazon (AMZN-Q) are the world leaders in cloud computing to a lot of companies.

Sees this as a Hold, more of a market perform. A lot of this has to do with the PC market and with PC upgrades slowing down. Also, doesn’t see any accretive contribution on their recent LinkedIn acquisition. They have struggled with a lot of their mobile applications. Also, revenue growth seems to be pretty meager. They have an enormous amount of revenue from outside the US, so the strong US$ hurts.

(Top Pick Sep 19/15, Up 37.87%) If it pops to EBV+7, $76 it would be a sell. Model price is $62. It just had a positive transit over one of his lines, meaning it is a buy signal.

He likes it. They are very cloud focused instead of hardware focused. He likes it cause of this in the short term. They have a lot of cash. Acquisition should be a lot of the strategy from here. He is not in a rush because they are at 20 times earnings. APPL-Q is lower. The MSFT-Q acquisition of Linkedin is very large and he wants to see how they are integrating it. It will take some time.

The tech sector has strength in October to January and then mid –April to end of July. Watch your short term momentum indicators. The stock is overpriced on a technical basis. Stick with the stock.

(Market Call Minute.) This is going to be an interesting one as earnings are coming up. They have been a little bit spotty in their releases, but another big player in Cloud and subscription based software.

This is transforming itself. It has a new CEO who is really focused on growth. They are really focusing on what is the priority in the technology world, which is Cloud computing and mobile technology. A lot of people feel that LinkedIn was expensive, but it helps them expand its presence in the Cloud application space. Trading at 18X forward earnings and has a pretty decent growth rate of 2.8%. They have delivered an annual dividend growth rate of over 17% over the last 5 years. Dividend yield of 2.8%.

The LinkedIn acquisition is a big risk. Whenever big companies do big acquisitions, it scares him. Most acquisitions either don’t work at all, or don’t work out anywhere near what the company expects. They haven’t bought a lot of companies, but the last one they bought, Nokia’s hardware business, they just finished writing it off to zero.

Has held the stock for a long time and really likes it. The acquisition of LinkedIn is a very big deal, and he can see the value of them doing this. It seems to make a lot of sense.

They have been given a lot of credit for moving away from the PC World and into a variety of other areas, most particularly the Cloud. The new CEO is widely liked and has been given a lot of room by the street to turn the company into a growth company. Just acquired LinkedIn for about $25 billion, which trades at about 7X revenue. LinkedIn has a very spotty financial track record. He wouldn’t buy Microsoft based on this acquisition. Sees Microsoft as an expensive tech stock. There are other areas in the Tech sector that are much more compelling.

There are lots of questions on how they may or may not integrate their acquisition of LinkedIn. They probably can derive some revenue out of this. Doing a good job of converting their revenue base to a subscription base model, both through their office software and their Cloud business. The new CEO said he was going to cut 25,000 jobs so there is room for margin expansion. They still have quite a number of jobs to cut. Have grown their dividend at 11% or 12% a year over the last 5 years.