Click to EnlargeSome stocks need no introduction. And yet familiarity breeds contempt. That’s pretty much the state of Microsoft (NASDAQ:MSFT) right now, which has taken a pretty good beating the past two months but could be in line for a decent recovery if the bulls fight back in December.

Microsoft is the world’s largest developer and manufacturer of software. Its bread and butter still is operating systems and the Office suite of productivity tools like Word and Excel — the products that helped launch the company to fame in the early 1980s and ’90s.

In the last fiscal year, these two product lines were responsible for 60% of the company’s massive $69.9 billion in revenue. Although everyone has predicted the demise of Microsoft’s hegemony for years, researchers at Gartner figure that the Windows operating system still runs 78% of all computers in the world today.

Another 24% of the revenue total is attributed to Microsoft’s second-largest division, Servers and Tools, which provides large enterprises and governments with the software needed to run everything from websites to data centers.

To extend its reach to the living room in recent years, Microsoft has made great strides with its Xbox 360 video game console. It has been in a tough contest with Sony (NYSE:SNE) and Nintendo (PINK:NTDOY) for years in this market but finally has broken through to be the sector’s revenue leader. The game consoles themselves are not profitable — Microsoft loses around $126 per box — but it makes up the difference (and much more) by selling games and the online service Xbox live, a billion-dollar business by itself.

In mobile software, Microsoft has lagged badly for more than 10 years, but the company finally has been gaining traction with its latest releases, including Windows Phone 7.5 (nicknamed Mango). This is one fast mobile operating system. My wife has a new HTC Titan phone running the new Mango code, and it is incredibly slick — with speed, size, functionality and sound clarity that put my iPhone to shame. It can be used as a Wi-Fi hotspot, or “tether,” which brings super-fast Internet connectivity to any laptop or iPad within several hundred feet.

Windows Phone 7.5 still is a tiny player in a market dominated by Apple‘s (NASDAQ:AAPL) iOS and Google‘s (NASDAQ:GOOG) Android, but it at least puts the software giant back in the game.

Click to Enlarge Meanwhile, Microsoft has fully retooled its products suite for use on mobile devices, launching Office 365 earlier this year to allow enterprises and schools to use the “cloud” for storage of documents and email for customers on the go. The new suite also includes a new version of SharePoint, the document editing platform, and Lync Online, which is a Skype-based instant messaging/calling/video platform.

Office 365 is priced at $6 per user per month rather than the annual subscription fees Microsoft previously has charged for large installations. Some analysts fear that cloud computing is a double-edged sword that will turn the company’s products into commodities. But realistically this was a necessary step to increase profit opportunities while at the same time preventing an erosion of users to the increasingly robust suite of products offered by Google Apps.

The future for Microsoft is a little murky now as so many people are using mobile devices such as iPads as their primary device, but I suspect that Windows 8 will help keep the company on track for at least another couple of decades. Never count these guys out.

As you can see in the chart above, shares have simply come right back to their uptrend in the past two weeks. Bulls must emerge here, and they will. Watch the $23.50 area, though, because if selling across the broad market gets serious, that level will be breached and selling will escalate rapidly.

For more guidance like this, check out Markman’s daily trading service, Trader’s Advantage, or his long-term investment service, Strategic Advantage.