Q is no doubt a great company and going all the way to the stars but MSFT is also an all time great and will no doubt go higher.
limtex,
OT
I will file the above in my memory bank. Lets talk a year from now. :)
Just out of interest although probably only use a tiny percentqage of the W98 and Office capabilities I will still get the new versions. don't care just want the latest because there will be features that enhance my every day work.
In the mean time, I suggest you use more than a tiny percentage of your MSFT products and build yourself an excel model. Let us do a cash flow series.
Start off with year one. You just bought MSFT for $430 Billion so enter a negative $430 Billion amount under year 1. Now I am going to give you a wild assumption that MSFT's profit margin is 100%. So the return on investment after the first year is $17,217,000,000 (current years revenue). Now I am going to give you another wild assumption that MSFT will grow at 30% per annum, year after year. So under year 2, multiply $17,217,000,000 by 130%. Blow that out for 10 years.
Do you see it now?
It will take over 8 years before you will recapture your original investment of $430 billion. At which time, MSFT would have to have revenue of $108 billion in order for the model to be true.
Of course, MSFT's profit margin is not 100%. I am using this ridiculously generous assumption to demonstrate how grossly over valued this stock is. I am also using this assumption because the blind bulls will tell you how profitable MSFT is. My counter is that no company has ever had earnings higher than revenue.
The blind bulls will also tell you that MSFT has tons of cash, something like $20 billion. Yes, that is a lot of cash to me but it is less than 5% of the market cap. You give me $430 billion for this dog and I will gladly give you back $20 billion as a rebate.
But then again, as long as everyone goes on believing that "duh, yeh, if you want to own tech, you got to own MSFT", nothing will ever happen. Just as the model shown, MSFT will be worth your investment in 20, may be 30 years.
Man, I am challenging Maurice as ranter of the day.
Ramsey |
