Word on the Street is money managers are buying after the suit was filed. Look for more buying opportunities during options expiration week.
The gang of 21 made this stock cheap. An earnings surprise to the upside will propel the price higher.
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Microsoft: Safe Stock?
Microsoft seems under attack by the U.S. Justice Department. So why are many Wall Street professionals recommending you buy the stock?
It's true. Money manager L. Roy Papp, whose mutual fund owns $40 million of Microsoft stock, didn't even interrupt his vacation to make a phone call when he heard the Justice Department was suing Microsoft. Another fund manager, Ed Keely, bought 125,000 shares when the Justice Department made its announcement. Like many on Wall Street, they're betting millions that the government's antitrust suit will be little more than a footnote to the story of Microsoft's long upward march.
What's their reasoning? They note that new versions of several of Microsoft's most popular products will appear in the next 12 months, and they think the company's estimates of future sales are intentionally conservative. They also note that millions of new dollars flow into index funds every day, and since Microsoft is a big part of the major indexes, like the S&P 500, lots of those dollars have to go into Microsoft stock.
The Microsoft bulls argue that the company has beaten back major challenges before and ended up stronger each time. And in the highly unlikely event that the Justice Department gets Microsoft broken up into separate companies--well, when that's happened before, with Standard Oil and AT&T, the shareholders made a killing.
Fortune Business Report, 6/11/98
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