Microsoft is going to do very well in the long term over the next couple years. 2008 Will be the first year when businesses start to take on Windows Vista and next generation of microsoft software. Microsoft is taking on everyone on every different front, and expanding into new markets. Microsoft is a clear winner for business essential software, and a close second in computer hardware, internet services and social networking.
When asked about the costly development of Windows Vista at CES, Bill Gates calmly replied: "It was the best $6billion dollars i've ever invested."
I think Microsoft is in a great position and is undervalued. THey have spent the last few years setting up a framework for success (Vista, Office 2k7, Xbox 360, Xbox Live, live.com) and they are going to start reaping the benefits starting this year.
I'd imagine average gains in the next 6 months - a year, and serious revenue growth in 2008.