Market Behavior

Market Behavior

The stock market is characterized by periods of highs and lows and thereby making it a highly fluctuating market. To analyze and study the stock market behavior, we shall follow the Microsoft Corporation stock trading for a period of eleven weeks. The Microsoft Corporation will be an interesting focus of economic analysis since the company is a renowned establishment that was instituted in 1975 and that has climbed on the corporate ladder to be the leading company in the microcomputer and technology industry. Presently, it is globally rated as third in the given industry. The company has diverse products that range from computer programs to networks. The first IPO was moved in 1986 at a price of $ 21 and the closing price at that day was at $ 28. Over the years, the company’s share prices have been relatively stable ascertaining the worthiness of the institution by imparting a level of credibility on the firm’s business dealings, product differentiation and market stability.

The current official market price is $ 25.66 meaning that with the $ 1,000, 39.97 shares can be purchased. The 1y target est. that gives the anticipated price of a single share at the end of the year is $ 36, a difference of $ 10.34 (Bloomberg.com, 2010). Ceteris paribus, this means that it would be profitable to purchase the shares at the current given price. The share change value was at $ 0.66 meaning that a gain of the same figure was made on each individual share as compared to the previous day. This translates to 2.64% change (Bloomberg.com, 2010). The bid and ask prices are $ 25.72 and $ 25.99 respectively (Bloomberg.com, 2010). The bid price indicates the highest price level that the stock traders are willing to pay for any stock level. The ask price on the other hand is the least price that the trader can sell to an interested member. Upon the compromise of the ask and bid prices, trade can then take place and this sets the stock value in our case being $ 25.66. With the market having opened at $ 25.04 during this particular day, it shows that both the sellers and the buyers gained (Bloomberg.com, 2010).

With the investment period being eleven months, the quarter est. earning per share (EPS) fixed at 06/10 stands at $ 0.46. At 09/10 period, the quarter est. EPS will escalate to $ 0.55 (Bloomberg.com, 2010). The price/earnings ratio is $ 13.092, which we can consider as being very low. The desirable P/E ratio would be at least $ 25 and therefore the analysis and following up to be done on the organization would be able to indicate the reasons for the gap. The est. P/E is even lower at $ 12.50 (Bloomberg.com, 2010). The dividend yield is promising to the investor at $ 2.026 meaning that for every share purchased, a sum of the same amount will be gained on each (Bloomberg.com, 2010). In a period of fifty days, the average volume traded daily is 74,146,555 (Bloomberg.com, 2010).

A market refers to a place where trade exchange takes place. In relation to the market is the market share that gives the number of consumers as a fraction or percentage of the whole users of a given industry. The higher the market share, the higher the level of profits and revenue that the company will own. With the advent of trade globalization and liberalization, domestic markets have now expanded to include the international market. This infuses a level of competition that pushes the company to ensure that its business processes like production are carried out efficiently to reduce running costs. For the computer industry, there has been a global market shift towards the use of open source program (OSP). OSPs are downloaded as freeware and the given user can access the source code and alter it to the desired program. This makes OSPs have more compatibility with different hardware. Linux has created a lot of competition to Microsoft in the area of OSP and unless the Microsoft offers the same products to the public, it stands to lose its customers to Linux and other companies offering the same product (Beyazitoglu, 2010). The inference here is that it stands to lose its market share and subsequently it profit and revenue levels will decrease.

Technology used in the production of Microsoft products has been wanting to the environmentalists. On a recent study, the company was rated as seventeen in a list that was generated concerning companies whose production techniques were degrading to the environment. The social and economic implication of such is high presently with the ongoing campaigns in favor of environmental preservation. To promote the social aspect, the company has initiated environmental friendly materials in the production process. Polyethylene terephthalate is being used in the production of the packaging material since it is biodegradable. To reduce on emissions, the company has mounted at least two thousand solar panels that are to provide 15% of the energy used in the production process and thereby reducing the emissions by the same percentage (Beyazitoglu, 2010). Microsoft Corporation has fixed dumping compost bins that aids in the decomposition process. This has reduced the wastes by half. Lastly, the water program instituted in its campus saves up to eleven million gallons annually.

Microsoft’s major resource is the labor component. The company has employed ninety one thousand two hundred and fifty nine employees. Twenty-seven percent of these are females while the rest are males. The company promotes an equal opportunity policy of employing people despite their gender, race, sexuality and religious orientations. Five years ago, the corporation had a 0.86 index in its policies concerning the employees’ rights. After instituting the gay and lesbian rights in its policies, the index was raised to 1.00 by the fact that it was able to provide equality to different sexual groups (Beyazitoglu, 2010). Apart from this, the company offers a good salary package and looks at the employees’ welfare adequately. The Connector is a bus service that operates in the Seattle area that provides subsidized transport facilities reducing the cost of travelling for the workers.

References:

Beyazitoglu, F. (2010). Business Marketing – the Case of Microsoft. Munchen, Deutschland‎: GRIN Verlag

Bloomberg.com. (2010). MSFT: US Microsoft Corp. Retrieved June 14, 2010 from http://www.bloomberg.com/apps/quote?ticker=MSFT:US

 

 

 

 

 

 

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