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Guy Adami: Microsoft Feels Like It Grinds Higher

Shares of Microsoft sold-off modestly in extended trade after the software giant released results that beat expectations but left investors under-whelmed.

The company said fiscal first-quarter profit rose 6 percent, meeting Wall Street's modest expectations helped by strong sales of its popular Office applications package.

However on the downside, Microsoft reported only slight gains from its flagship Windows operating system.

(But) ”The dividend yield is good, the balance sheet is strong and valuations are attractive; the stock feels like it wants to grind higher,” says Guy Adami. He thinks it could go to $29.

”I’m also a buyer on the pullback,” says Brian Kelly. “It’s a good level to get in. “I’d use the dividend to buy a put and take a free look.”

”I look at Microsoft as a safe haven in technology,” adds Brent Thill of UBS. He tells us Corporate America is looking to the company for “new things in the cloud going forward. We think there’s a lot behind the scenes that investors haven’t given them credit for.”

By the numbers, the world's biggest software company reported net profit of $5.74 billion, or 68 cents per share, up from $5.41 billion, or 62 cents per share, a year ago.

That met Wall Street's average estimate, according to Thomson Reuters I/B/E/S. It is the first time in 10 quarters that Microsoft has not exceeded the average estimate.

Overall sales rose 7 percent to $17.37 billion, helped by its Office product, which remains popular with businesses even in the difficult global economy.

Windows sales edged up only 2 percent, in line with limp personal computer sales last quarter.




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Trader disclosure: On Oct 20, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Kelly is long GLD; Kelly is long TLT; Adami Owns AGU; Adami Owns C; Adami Owns GS; Adami Owns INTC; Adami Owns MSFT; Adami Owns NUE; Adami Owns BTU; Terranova is long VRTS; Terranova is long LQD; Terranova is long MUB; Terranova is long FCX; Terranova is long TBT; Terranova is long OXY; Terranova is long GS; Terranova is long F; Terranova is long CAT; Terranova is long AXP; Terranova is long APC; Terranova is long EMC; Terranova is long AAPL; Terranova is long IBM; Finerman owns AAPL; Finerman owns BAC; Finerman owns GOOG; Finerman owns MA; Finerman owns JPM stock leaps & puts; Finerman’s firm owns AAPL short calls; Finerman’s firm owns MSFT; Finerman’s firm owns YHOO short calls; Finerman’s firm owns IBM short calls; Najarian is long call spreads in CMG; Najarian is long call spreads in AAPL; Najarian is long call spreads in MSFT; Najarian is long call spreads in CMI; Najarian is long call spreads in IBM; Najarian is long CBOE; Najarian is long CME; Najarian is long CIGX; Niles is short INTC; Niles is long NUAN; Dicker owns TOT; Dicker owns RIG; Dicker is long oil

For Mike Khouw
Cantor Fitzgerald is a market maker of MSFT
Cantor Fitzgerald is a market maker of POT
Cantor Fitzgerald is a market maker of MOS
Cantor Fitzgerald is a market maker of FCX
Cantor Fitzgerald is a market maker of INTC
Cantor Fitzgerald is a market maker of IBM
Cantor Fitzgerald is a market maker of HPQ
Cantor Fitzgerald is a market maker of AAPL
Cantor Fitzgerald is a market maker of NUAN
Cantor Fitzgerald is a market maker of YHOO
Cantor Fitzgerald is a market maker of LUV
Cantor Fitzgerald is a market maker of UNP
Cantor Fitzgerald is a market maker of DELL
Cantor Fitzgerald is a market maker of WYNN

For Brent Thill
1. The U.S. equity strategist, a member of his team, or one of their household members has a long common stock position in Microsoft Corp.

2. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking services are being, or have been, provided.: Microsoft

3. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided.: Microsoft

4. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.: Microsoft

5. Within the past 12 months, UBS Securities LLC has received compensation from this company/entity: Microsoft

For Jorge M. Beristain
Deutsche Bank and/or its affiliate(s) owns one percent or more of (FCX) any class of common equity securities of this company calculated under computational methods required by US law. Deutsche Bank and/or its affiliate(s) has received non-investment banking related compensation from (FCX) within the past year.




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