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Technology Stocks : How high will Microsoft fly?
MSFT 473.99+0.4%Nov 24 3:59 PM EST
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To: Just_Observing who wrote (28987)9/1/1999 4:52:00 PM
From: johnd  Read Replies (1) of 74651
 
Taking a longer term view on MSFT, I feel fiscal 2001 and fiscal 2002 should be
solid considering corporations deployment of windows2000, deeper inroads into
server and business app software markets.

However, fiscal year 2000 looks very weak. There would be softness in NT markets
as customers wait for Win2000 (Microsoft predicted growth rates will be 1/3rd of
what it was last year in the NT segment).

The new Star office from Sun poses some danger to retail sales of office2000
as well as some pricing pressures. I worry about several analysts feeling it will
chip away at office sales. Last night I asked several people to get a feel on
this. Lot of people I talked liked the star office, free product and does a lot
of things needed for home use. This is a bit dangerous.

There will be good opportunities for accumulating microsoft at cheaper prices:

(a) Possibly around Novemebr or December when Jackson rules (May be a 15% drop)
(b) Possibly the Y2K sell-off that I still expect.

I still feel MSFT will touch 10 to 15 points lower from where it is now some time
from now to December. The reason for that again is that it could easily hit 55
trailing PE on a 1.5 trailing eps or about 78-82 sometime in next 4 months.

Currently at 92 it boasts a PE of 66 or so. Not cheap by historical measures.

The presentations and conference call from a month ago are still eachoing in my
ears:

"Earnings growth rates in single digits"
"Margins will not grow"
"NT groth will be a third"
"Our valuations are too high"

Some of you will say this is routine. But the statements are strong enough
that they cannot be ingnored.
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