Microsoft

Cash machine. In its latest quarter, Microsoft generated $4.2 billion in operating cash flows on $20 billion in revenue. As a result, the company repurchased $5 billion of its shares and declared $1.3 billion in dividends. Consider that from 2008 to 2010, Microsoft had more than $64 billion in operating cash flows.

Franchise businesses. Microsoft has a set of blockbuster business segments. They include Windows, Office, the Xbox, and the server division. For example, Windows 7 is the fastest-growing operating system in history and has already sold over 300 million licenses. Also, the Kinect gaming system has been a big hit, with 8 million of the devices sold in the company’s most recent quarter.

The cloud. This is a megatrend in technology. Essentially, cloud technology uses the Internet to provide business applications. It tends to be cheaper and more productive. The good news is that Microsoft has the infrastructure, developer network, and software to benefit from the growth.

In fiscal 2010, Microsoft spent $8.7 billion in research and development — with much of it going into cloud technologies. In fact, the company expects to have 90% of its 40,000 engineers work on these offerings.

Lack of focus. With huge cash flows, Microsoft has been aggressive in investing in new businesses. The problem is that there seem to be few synergies. Should Microsoft really have the Xbox or its Bing search engine? Could these far-flung operations mean distraction for management? If anything, the best approach may be to spin off some of these businesses.

If you want to be on top of this world, follow 'Bill Gates' dreams and there you have it.