Tech junkies and media sophisticates love to blast Microsoft as an ailing dinosaur that's stuck in the pre-Internet era of the desktop PC. But shares of the software giant have been attracting an unlikely collection of exceptional investors. One is value veteran Marty Whitman at Third Avenue Funds, who purchased two million shares earlier this year, noting that the stock was selling for less than 15 times earnings (after deducting its cash holdings from the market value). On the growth side are the talented managers at the Jensen Fund, who also purchased a large position recently. Co-manager Bob Millen says Microsoft has everything Jensen's managers look for in an investment: high return on equity, robust earnings growth, growing free cash flows, and formidable competitive advantages.

Microsoft is launching the broadest barrage of new products in its 30-year history. In November it released Vista, the new version of the Windows operating system, and Office 2007, an upgrade of the popular software suite. Both businesses average operating margins of more than 70 percent, and they generate about 80 percent of Microsoft's total profits. And with Windows running on more than nine out of every ten computers in the world, the market is enormous. Other new products: everything from business servers to the new Xbox videogame machine.

After several stumbles, there's also evidence that Microsoft is getting Internet religion. In October the company struck a deal with Novell, a longtime enemy that is now a proponent of Linux, the open-source operating system that competes with Windows. The agreement makes it easier for customers to use both Windows and Linux software alongside each other on big computers, essentially brokering a peace between two opposing camps in the software industry.

Don Yacktman, another recent buyer, points out that the company has returned more than $90 billion to shareholders in stock buybacks and dividends over the past few years, a trend he says will continue. Says Yacktman: "Despite selling at one of the lowest price/earnings multiples in our portfolio, Microsoft possesses potentially the strongest platform for growth of any company we own."