All companies of the size of Microsoft, with a market capitalization of $ 242 billion, growth will be a problem because of its size. But this does not mean the stock is dead. Far from it, Microsoft remains a viable long-term, software companies and is cash rich with $ 34 billion, or $ 3.28 per share in cash. This gives the stock plenty of financial flexibility to acquire or develop technologies for growth. Microsoft has just announced that it spent $ 1.1 billion in R & D units in the MSN Internet FY07. And according to the Wall Street Journal, Microsoft is exploring the possibility of taking a stake in Internet media company Yahoo (YHOO) to take on Internet advertising Behemoth Google (GOOG).

But with an estimated five-year growth rate of earnings a squallido 12%, the company has cut its work for this. Trading at 16.30x its FY07 EPS estimate of $ 1.44, the stock is not expensive, but seems to be not as a price increase of stocks.

PEG on the surface of 1.51 is not cheap, but if you cash discount of $ 3.28 per share, the estimate of PEG decreases to about 1.0, a decent value. Also, if Microsoft can improve its estimate of 12% growth rate, the target decrease further.

The fact is Microsoft at current prices is worth a look. If you want to play the stock, but not ’t want to shell out $ 2347 for a fee of 100 blocks, you may want to look at long term options, also known as jump. For example, the in-the-money January 2008 $ 22.50 Call Microsoft jumps not set to expire until 18 January 2008 now costs $ 380 a contract (100 shares).

This means that the risk of a total of $ 380 for the chance to participate in the upside potential of 100 shares of Microsoft for the next 20 months. The threshold price is $ 26.30. If Microsoft breaks $ 26.30, you should begin to make money on your jumps. Conversely, if Microsoft fails to do anything, the maximum is $ 380, on the first option to play.

Warning: The above example is for illustrative purposes only and should not be construed as a real option strategy. Due to the higher risk inherent in options, I recommend you speak with an investment professional before deciding to take any strategy involving options.

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But there was a trend towards the development of rental movies via the Internet. Blockbuster has failed to recognize the growing importance of Internet video rental, a bad miscalculation on his part. The shares have fallen steadily over the current $ 3.80 to $ 4.20 channel. Once a big hat, Blockbuster is now a small-cap and is struggling to regain a sense of direction. The company entered into the Internet DVD rental, but has a lot of recovering to do.

Basically, Blockbuster has lost money over the last three straight quarters and struggling to grow its revenues, which are expected to increase just 1.1% in the 2006 budget. His five-year estimated earnings growth rate is a mere 2.5% per year, which is pitiful.

Blockbuster has to do with its massive debt load of $ 1.27 billion or a debt-equity of 2.73:1, which suggests a low budget. Couple with poor capital and understand the high financial risk. Faced with stagnant revenue growth and losses, Blockbuster faces a difficult battle upward to regain its lost glory. The odds are stacked against it.

In view of Blockbuster’s online DVD rental company NetFlix (NFLX), which debuted in May 200, trading near $ 40 in 2004, before sinking to the level of $ 10 in 2005, before the event.

NetFlix saw the future for DVD rentals and has been online and not through the “b Rick and deadly? Route that Blockbuster has decided to keep. Directly in front of Blockbuster, NetFlix is profitable and has been for the last three quarters straight. Has 4.2 million subscribers and growing. Its revenues are growing and this is expected to increase 32.5% in fiscal 2007, which saw a Blockbuster nonexistent revenue growth.

Blockbuster has entered into the online DVD rental scene, but is well behind NetFlix. Moreover, even manages the NetFlix online DVD rental for Wal-Mart Stores (WMT), after the giant retail has decided to close their units online DVD rental store and run it instead NetFlix.

Trading at 36.73x its estimated FY06 EPS, NetFlix is not convenient. But if it can continue its strong growth and gain estimates $ 1.11 per share for FY07, the evaluation becomes more reasonable. The pressure is clearly on NetFlix to deliver but it is the correct path.

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