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Motley Fool: In the clouds

Motley Fool: In the clouds
Written by Publishing Team

Microsoft (Nasdaq: MSFT) is responsible for powering more than one billion computers and devices worldwide via its Windows operating system. Lately, the company has grown more diverse, with forays into gaming and more.

It may come as a surprise that Microsoft’s biggest business is cloud computing, which had more than $60 billion in revenue during fiscal year 2021, just over 35% of the company’s total. Microsoft’s Azure platform is business-focused, and is used by 95% of Fortune 500 companies. It provides cloud infrastructure, artificial intelligence, data analytics, and security — and the list continues to grow.

Microsoft’s cloud segment is outpacing its overall growth, highlighting companies’ appetite for cloud-based services, which will drive growth going forward.

Investors who buy Microsoft stock for cloud computing exposure also get access to the dominant Office 365 software business, not to mention the Xbox console gaming platform and the Surface line of tablets and laptops, a multibillion-dollar business in its own right. The stock also pays dividends that have been raised at a rate of 10% annually for the past five years.

Long-term investors interested in cloud computing should give Microsoft a closer look. (Theresa Kirsten, an employee of LinkedIn, a Microsoft subsidiary, is on the Motley Fool Board of Directors. Motley Fool owns and recommends stock in Microsoft.)

ask the fool

s: What is a secured credit card? – Kuwaiti Dinar, Garden City, Idaho

a: If you’re having trouble getting approved for a credit card, it could be because you have a bad credit history — or maybe no credit history at all. But you’re out of luck: You can apply for a “secured” credit card instead.

Secured credit cards require their holders to fund an account with cash, which acts as a type of security deposit and acts like a line of credit. If you deposit $1,000, you can charge up to that amount, pay the bill when it’s due, and then resume payment again, up to that amount. Secured credit cards can allow you to build a good credit history, ultimately helping you qualify for a regular credit card.

s: Is the company having a lot of cash on its balance sheet a good thing? – OS, Franklin, TN

a: It could be good or bad. Having a lot of cash on hand means that the company can work on opportunities that arise, such as buying another company. Some businesses also store cash so they can cover taxes owed if and when they bring in profits overseas. Surplus cash can be used to reward shareholders by spending it on dividends or share buybacks. (It is generally only worthwhile to buy back shares when they are undervalued.)

Not much cash is used – especially when interest rates are low – for productive use, so many companies try not to keep too much cash on hand. If they need more liquidity at some point, they assume they can borrow or issue more shares.

stupidest investment

My stupidest investment was wasting a good chunk of money on a losing stock, mainly because I couldn’t make the decision to get rid of it. I tend to hold on to losers for a long time, thinking they’ll come back. Unfortunately, I have many investing mistakes to choose from. I currently have 15 different stocks losing money – losing more than the total value of my home!

But I am grateful for some things – that we have the money to be able to invest enough to be able to lose that much, that our winners far outnumber the losers. I am also grateful that the Motley Fool was recommended to me by a co-worker almost a quarter of a century ago. – Rob S., online

The fool responds: We are glad to have you stay with us for a long time, and hope to serve you well for another 25 years.

Deciding when to sell can be a difficult decision. Ideally, you will keep track of your holdings throughout the year, reading their news and financial reports at least every three months. This can help reduce negative surprises, as you may see trouble coming. When the stock drops significantly, take some time to do some digging to determine if the company is experiencing temporary or long-term problems. Holding on to short-term headwinds is often best, but longer-term challenges can be a reason to sell.

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