Image source: Microsoft.
Few companies have been as successful as Microsoft (MSFT -2.41% ) overtime. By becoming the mainstay of operating system and office productivity software when PCs first became available, Microsoft has built a lasting franchise that has thrived for decades. Looking at Microsoft stock history, you can find definitive periods of success that corresponded to various areas of growth. Below, we’ll see how fundamental business expansion, stock splits, and dividends have all helped produce significant returns for Microsoft investors.
MSFT data by YCharts
Breaking down Microsoft’s stock history
As you can see above, Microsoft’s stock history falls into three clear time periods. From the 1980s to 2000, the tech boom helped drive Microsoft’s stock ever higher. This is also evident when you look at Microsoft’s stock split history, which had eight stock splits between 1987 and 1999. During this period, computer use became ubiquitous in the business and personal worlds. , and the trend of technological innovation created new applications for computers, the rise of the Internet and the need for computer hardware capable of meeting the demands of sending and receiving data via networks was not of the least.
After the technology crisis of 2000 to 2002, Microsoft’s growth prospects drastically reduced. The company continued to rely on its Windows operating system and Office suite of business productivity programs, and both of these cash cows helped generate consistent revenue and profits. Yet efforts to keep pace with rivals were not entirely successful, and Microsoft eventually ceded pioneering status in key areas such as the portable music player, smartphone and tablet to other technology companies.
Partly in recognition of the end of its period of fastest growth, Microsoft began to take steps that reflected its status as a more mature company. It began paying dividends in 2003, and over time it has significantly increased its quarterly payouts. Microsoft’s dividend history shows that the company has been generous in sharing capital with its investors, repeatedly achieving double-digit percentage increases in payout.
How Microsoft started to bounce back
Since 2013, Microsoft has entered the most recent phase of its stock market history, the one that has been the most lucrative for its shareholders. The stock price has more than doubled in less than four years, and much of Microsoft’s progress has come from recognizing its limitations and wanting to move in new directions.
For example, Microsoft reversed its longstanding reluctance to embrace the mobile revolution and instead began to focus more on mobile and cloud computing. One of the main initiatives was to offer the key Office software suite in a mobile format, allowing users of devices from manufacturers other than Microsoft and its most trusted partners to have access to software products. At the same time, Microsoft has also been working to evolve Windows into a more mobile and cloud-enabled operating system, with Windows 10 seeking to provide a single platform for all of its users’ devices.
That said, some investors remain skeptical of Microsoft’s acquisition-based growth efforts. The company’s most recent major purchase LinkedIn ( LNKD.DL ), which the company spent $26.2 billion on, is just the latest in a series of high-profile and expensive purchases. Past purchases have included Nokia’s phone division and Skype’s internet-based calling and video services, and Microsoft hasn’t gotten the results of those purchases that investors wanted to see.
More successful were Microsoft’s moves to establish partnerships. By working with Samsung, Lenovo, and other mobile device makers, Microsoft has arranged for key productivity apps to come preloaded on smartphones and tablets that run the Android operating system. This does not prevent companies from choosing alternatives among Alphabetit is ( GOOG -4.26% ) ( GOOGLE -4.15% ) Google division. But given that Google has traditionally enjoyed a competitive advantage by having the OS on Android phones in the first place, Microsoft’s ability to challenge Google is a good example of how Microsoft is trying to defend its turf more effectively. .
Where does Microsoft go from here
Looking ahead, Microsoft appears to be entering a new era of growth. The stock’s performance is unlikely to match what it gave investors in the 1980s and 1990s. But for those who have patiently waited out tough times for the tech giant, Microsoft’s recent gains are a a welcome sight, and shareholders hope the good times will last for a long time.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end advice service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.
Comments are closed.