Jill, I guess everyone was on board who wanted to be on board, and it looked like Mr Maffei's guidance was a good excuse to sell.
What provided the real catalyst IMO was Mr. Maffei talking about earnings slowdown due to, among other things, "uncertainty surrounding Y2K". Although I didn't hear the call, all the reporters made sure they printed that tidbit.
It seems on the one hand to be a bit irresponsible to give such vague but bearish guidance, but on the other hand, the public is holding a lot of MSFT shares in their pension accounts, and if there is an ordering slowdown later this year due to order patterns because of y2K preparation, then Mr Maffei has informed the public, so they can't say that they weren't warned about it.
What's funny about Mr. Maffei and the analysts is that the game has moved beyond Mr. Maffei providing typical conservative forward guidance. Now it's "He's always conservative, but this time it sounds like he really means it! We know we've said that before, but this time we think he really, really means it"!
IMO Mr. Maffei is actually exacerbating the swings in MSFT stock by talking down the estimates too low: Because now everyone expects that of course since the estimates were guided low, that MSFT will of course beat them handily, therefore the stock ramps up in anticipation of that. Mr. Maffei sees the ramping stock price and evidently feels he needs to "talk it down" before it gets out of control, and so is even more conservative in guiding estimates for future quarters. Hence the stock drops on his "I really mean it" low-balling of future revenue and earnings. Which unfortunately, just sets up the stock for more speculation that the low-balls are too low, ramp the stock, watch MSFT beat, Mr. Maffei gets called in to talk things down, etc etc. |
