Four ETFs To Play Microsoft’s Income Jump

Core products pushed revenues and net income up at Microsoft (MSFT) in the third quarter, further extending out the exceptional earnings season witnessed by the technology giants and giving further support to the Software HOLDERs ETF (SWH), the iShares Dow Jones US Technology (IYW) and the Technology Select Sector SPDR (XLK) and the Vanguard Information Technology ETF (VGT).

According to Microsoft’s Chief Financial Officer, demand for both Windows and Office products have thrived as businesses of all sizes increased technology purchases.  Furthermore, a new version of Microsoft’s flagship software, Windows 7, has sold more than 240 million licenses since its debut a year ago, making it the fastest selling operating system in the company’s history.   Another factor that aided in Microsoft’s performance was sales of Office 2010 which generated $5.13 billion in the quarter and, similar to Windows 7, sold 20 percent more units since the product’s launch that it did of the previous version of Office during the same time period. 

As for the future of Microsoft, fundamentals remain strong in that the Redmond, Washington based company is sitting on a boat load of cash and demand for its software products remains insatiable.  Additionally, Microsoft is forming new partnerships and launching new products that could potentially give it another boost.  Most recently, Microsoft completed the transition of search advertisers from Yahoo (YHOO) to Microsoft’s online ad system, plans to start selling its Kinect device for its Xbox 360 game consoles and expects its Windows 7 operating system for mobile phones to go on sale next month. 

As mentioned above, ETFs influenced by Microsoft include:

  • Software HOLDRs (SWH), which allocates 17.43% of its assets to Microsoft
  • iShares Dow Jones US Technology (IYW), which allocates 9.87% of its assets to Microsoft
  • Technology Select Sector SPDR (XLK), which allocates 8.36% of its assets to Microsoft
  • Vanguard Information Technology ETF (VGT), which allocates 8.15% of its assets to Microsoft.

Disclosure: No Positions

Categories: ETFs, Recent Articles

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