Hi Brian,
What you said is very true. But there are disturbing signs For Microsoft and Intel.
I'm an investor and am sometimes considered ruthless, once I've made my money I get out and find something else. Earlier this year, I was extremely bullish on both Intel and Microsoft. I decided to invest in LEAPS because of the high prices, I chose MSFT JAN 97 CALL LEAPS at 110 and bought them at $9. 10 Options. This week, I've sold them at $44 and have invested in 20 options of JAN 98 CALL LEAPS at 70 for $8 1/2. I have never failed at a LEAP, however short term options is another story. Anyways do your research before investing.
Back to the signs, have you noticed that the third quarters for both Microsoft and Intel were down dramatically compared to the previous two for the year. I've heard that NT sales are down, maybe people have seen though the hype or other factors, such as:
1. The lowering of UNIX workstation prices
2. Competition from Cyrix and AMD for Intel
3. The office suite of Corel is competing well with MSFT OFFICE
Then, there are future concerns like the:
1. NC(Javastation)
2. Netscape is winning
3. Revenues are being used for lots of new projects, like Win 97, Windows CE and their OS system for the new Merced for Microsoft while Intel is trying to create the Merced as quickly as possible.
The year coming up Microsoft and Intel are dependent upon the success of Windows NT. Revenues must grow at least 30% for them to keep their current pace. I'm betting that they don't, because of the NT. As UNIX capabilities improve over the next year what can they do to counter? When the new Merced comes out will it be comparible to the current UNIX products or superior? They have too much against them. What is MSFT's current PE ratio? Around 45, how about compared to 97's predicted earnings isn't it already in the high 20's? Over the past five years it been between 30-40! HINT! It's overpriced!!!
Well that's my opinion,
Ellison |
