Microsoft Corp (MSFT)

(Market Call Minute.) Not his favourite tech stock but it is difficult to argue with the valuations.

(Market Call Minute.) Not his favourite play in technology. Hard to ignore the valuations. Clearly growth is slowing down. Losing market share but at 10X earnings and the dividend yield there is really no need to sell it.

This has had 12 years of consolidation and is just starting to break out. Clear sailing. This is a leader.

(A Top Pick Sept 2/11. Up 23.16%.) Windows 8 is coming out, which could take some training for people to get used to and it could be an obstacle. Doesn’t think you would see the flow through on the uptick in the revenue that you saw on other things but it’s a much better product. Have a lot of products coming out.

Price action has been a lot better recently. We are going to see what they are going to do on the tablet side and the mobile side. Since the expectations on this are so neutral in the US, the stock itself is cheap. They have tons of cash. Apple (AAPL-Q) has stolen the spotlight and has been driving the things like the Q’s, the Spider technology index. Stepping into Microsoft is probably not a bad idea.

Doesn’t own, because it doesn’t have a lot of growth. Struggling. The thing that holds it together is the giant free cash flow yield. Generating 10% free cash flow yield. Windows 8 product is getting good reception and is an issue for them because they have never been really strong on the consumer side. Traction in this area would be good. Doesn’t expect to see miracles. Have competition coming in on their office products, operating systems, storage stuff. Been behind a little bit on developing virtualize solution for application development data centers but are catching up a little bit especially in the mid to low end part of the market.

Really good hedge if you own other tech stocks with a higher beta. More stable, and staggering free cash flow adding to their war chest. Earnings are doing quite well. Everyone is anticipating Windows 8. It will be interesting because Apple is good for people who consume content but Windows is better at creating content and will open up the iPad market

Windows 8 and Office 2013 are coming. There is also the Surface (new pad) coming. Trading at 10X earnings. Has $7 of cash. Thinks there will be a cycle upgrade on technology from companies because they avoided the 7 and the Vista. 2.6% dividend yield, which will probably be increased next year.

Not one of the high growth stories but is a valuation and cash generation story. A 10 multiple is exceptionally cheap. Windows 8 has clearly been a success. Move into the phone market with Nokia has not been as successful.

(A Top Pick Dec 21/11. Up 100%.) Wrote and April Put at $25. This expired worthless as the stock went up.

Good company. Very attractive valuation. Still has some earnings growth. For him, this would be a distant 3^rd choice in the technology area behind Apple (AAPL-Q) and Google (GOOG-Q).

(Top Pick Jun 8.11, Up 25.67%) Enterprise software. You can’t run multiple screens off an iPad. His techies have played with windows 8 and say wait for a home computer.