Microsoft Corporation (NASDAQ:MSFT) is the top stock in Jeff Ubben’s portfolio. It is also a stock that Jim Cramer and Stephanie Link of The Street will buy more of in the near future, the duo revealed in a discussion about the technology veteran.
The comment from the industry observers comes as Microsoft Corporation (NASDAQ:MSFT) triggered a negative reaction in the market after it announced on Tuesday an 11% increase of its quarterly dividend. Though substantial, Cramer said in the discussion that it is the smallest percentage increase in the company’s quarterly dividend in the past five years. Nonetheless, both Cramer and Link discussed the positives of Microsoft Corporation (NASDAQ:MSFT) and agreed that it is a stock to buy.
“We’ll look to buy more when we can,” Link said at the end of the discussion, to which Cramer replied, “Absolutely.”
According to Link, the market reacted adversely to Microsoft Corporation’s announced dividend increase because it was believed the company would increase its quarterly dividend by 20%.
However, she added that there’s more to the company than this increase and that the company is “definitely headed in the right direction”. Link added at a later point in the interview that the company has $86 billion in cash, of which $8 billion is in the U.S., which makes her say that they could have done more with the dividend increase.
Link said that the company, with all its money, can lever up their balance sheet and get rid of their $22 billion in net debt. Furthermore, she said that there’s more to come for the software juggernaut in terms of stock buybacks because they have only made $35 billion in purchases as opposed to their planned $40 billion stock buyback.
Cramer added to the discussion saying that former Microsoft boss Steve Ballmer was right to leave the company. However, when he did, people also criticized the appointment of Satya Nadella to the top post at the Windows-maker. Cramer believes that Nadella is the right choice for the company as he is someone who can actually turn the company around.
Cramer, who founded The Street, said that Microsoft Corporation (NASDAQ:MSFT) purchasing Mojang AB, the maker of popular video game “Minecraft,” gives the company’s video game business critical mass. The CNBC host also noted that David Faber, his colleague at CNBC, tells him that a Microsoft Corporation board member from ValueAct Capital is really pushing the company to act more aggressively in growing its business and that the board members of the company are listening.
Meanwhile, Cramer also said that people kind of hate the company for being at 16 time earnings and just staying there. However, he said that the company’s stock price is actually growing as it has climbed 24% in 2014. He predicted that the stock will get a boost in the last quarter of the year because people are going to realize that they want to own the stock which will spark a buying spree.
At the end of the second quarter of the year, Jean-Marie Eveillard’s First Eagle Investment Management reported owning more than 35.67 million shares of Microsoft Corporation (NASDAQ:MSFT).
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