Thread,
Here is how I think wall street looks at microsoft these days:
On the positive side, it is a good company with good products and management. It is a core holding
for several mutual funds. It will continue to deliver reasonable profits of about 25% growth per year.
There is windows2000 coming ahead that should make good inroads into server market.
On the -ve side: Windows2000 is delayed by the day. RC2 didn't happen this week, several scheduled
events are delayed on win2000. Office 2000 has the new star office competition. NT sales in the near
term could be weakened with customers waiting for win2000 and y2k software freeze. the DOJ outcome
is still casting a shadow (i.e. would you want to be the fund manager sitting with a billion on the
stock when it takes a 10 - 15% drop on Jackson's ruling?). MSFT management is guiding single digit
growths and telling wall street that 60 PE is too high.
Then there is the overall market issue. During times of lowering inflation and lowering interest rates,
high PE stocks do well. When the reverse occurs, like right now, higher inflation and higher interest
rates, high PE stocks get their PEs corrected. I think the likes of CSCO, MSFT, DELL, AOL, etc
while are all good companies, will see their PEs corrected. I think we will see CSCO under 60, MSFT
under 85, DELL under 40, etc.. sometime soon.
Anyways this is how I view the investment horizon out there. I don't see DOW and NASDAQ turning
seriously positive for a while may be until November. In fact, funds moving to cash position could
likely spiral to a market low soon that could take DOW and NASDAQ some % lower say 10% to 9800 and
2500 respectively.
johnd |
