Malarky! Microsoft is easily worth $156B and more! It is also worth a PE of 50+. The problem with GM, Intel, IBM, Unilever, is that whenever they want to build something (car, chip, computer, etc) they have to invest heavily in buildings and manufacturing. To build a new software program, Microsoft just needs to hire more engineers. Furthermore, none of the others can command as high a profit margin (and never will) as Microsoft can.
The same thing can be said for the two companies ahead of Microsoft. For Coke, there is only so much coke one person can drink in a year and only so many markets to go after. On the other hand, almost everyone buys new software or needs to upgrade. For GE, which is a great company, they simply are too big to be able to compete. They have union problems, major outlays for manufacturing, and razor thin margins on a lot of products.
As for profits, Microsoft will probably hit $4B this year on revenue of about $12.5B. Very FEW companies make that kind of profit. Everyone knows that Microsoft will some day be a $25-$30B corporation. All things being equal, that will be a yearly profit of $8B plus which would be a RECORD for ANY company on this planet. THAT is why Microsoft is worth $156B and why it commands a PE of 50!
Buy this puppy and hold on for long term. Anyone who has held this stock for any 5 year period has done better than 40% per year. Tell me where else you can get that? |
