Microsoft - The Rodney Dangerfield of Tech Stock? Hardly!

Once the darling of Wall Street, Microsoft is the reason its founder, Bill Gates, became the richest man in the world (although mostly due to the fact that Sam Walton dividing his Walmart

stake to his children after he died) until

, the Mexican tycoon who is the chairman and CEO of telecom companies Telmex and America Movil

, after he donated one third of his holdings to his philanthropic foundation. But for over 10 years now, Microsoft

has been trading mostly in the range between $25/share and $35/share, with the exception of dipping below $20/share during the financial tsunami. The glory of the company, and its stock seems to be in the past, and the company was threatened of becoming obsolete in the new cloud-based era. Microsoft, no doubt, had fumbled the balls many times since the internet came along. Its acquisition of WebTV yielded nothing to show, Hotmail had dwindled to third place in webmail, Vista was a huge disappointment, and the Zune was simply a flop. More importantly, its Windows Mobile system never went anywhere, and its new Windows Phone 7 is far behind iPhone from Apple

and Android from Google

, not to mention that it still does not have a credible tablet strategy, which started hurting the netbook area, the one area that Windows had seen its growth in the consumer market. Many people now say that Microsoft is irrelevant, a dinosaur counting its final days, with Apple, Google, and Facebook leading the future. However, if there's one thing about Microsoft, it's that they never give up, and they have the resource to do that too. Windows had to wait until 3.0 to finally emerge as the winner for operating system with a graphical user interface; XBox staged a comeback with its Xbox 360, and is now riding high with its

; and Microsoft Exchange displayed Lotus Notes as the 500 pound gorilla in corporate messaging. All these, of course, were only possible because of the tremendous profits Microsoft got from its Windows franchise, along with its Microsoft Office suites. Like the Energizer

bunny, these two pillars just keep Microsoft going and going and going. Even though companies like Apple and Google may be stealing consumers from Microsoft, they barely affected Microsoft's status in the enterprise world. With all the talks about cloud based office suites, none of them offers the depth of the Microsoft Office suites. And as of right now there is no credible challenge to Microsoft's office for serious business users. Besides being my personal opinion, this is reflected by the

. In fact, in the enterprise world, most companies can easily take Apple out from their operations, and they will be just fine. With Microsoft's out of the picture, though, a lot of businesses will be paralyzed. Google is trying to change businesses to use use more internet based services and lessen their independence on Microsoft, but enterprise managers and business owners, fundamentally skeptical people, will have a tough time accepting that they might be locked out of their data in case of service interruption, even though it may be as rare as a nuclear plant crisis. This enterprise 'moat', can be a very wide river to cross. The overhanging doubt, still, is whether Microsoft can participate in the high growth market of mobile computing. Up until February, everyone had written Microsoft off on this. Then came the

that Nokia would abandon ship on Symbian and chose Windows 7 as the platform for its next generation phones. Not surprisingly, people ridiculed this deal, and continued to write Microsoft off. These people, undoubtably, believed that Apple and Google already won the smart phone war. In reality though, the battle for smart phones war has barely started in the biggest battleground: China, where billions of people have not upgraded to any smart phone yet. In China, Microsoft and Nokia are still the biggest brands in software and cell phone, even though Microsoft might not make much money from it because of pirated copies, and Nokia is losing market share these days. Nonetheless, unlike the US, Nokia's product is still well respected, and has the necessary channels to distribute its products. Even though success is not guaranteed, and

, as Google's VP Vic Gundotra said, declaring the demise of this partnership seems a little premature. On the internet front, while Microsoft's Bing is far behind Google, it is

. With Yahoo using Bing's search, and Bing guaranteed a search spot in Facebook because of Microsoft's investment in the company, Bing has good potential to challenge Google. While Bing may continue to lose money, like Microsoft's previous examples, we are very sure that Microsoft will keep trying it until it gets somewhere. With Microsoft adding billions of cash every quarter into its hoard, its current cash and short term investments now represent almost a quarter of its market capitalization. Its P/E is now ~10, and with its 2012 forward P/E getting to single digit, Microsoft is cheaply priced, and investors should consider owning it unless they really believe Microsoft is doomed because of the losing faith in Windows. It is also paying ~2% in annual dividend, so at least investors get paid while waiting. If investors should consider shorting a tech stock that is passé, we believe Research in Motion

would be a much better choice. Let's just hope that any crazy talk of Microsoft buying Research in Motion never materialize.