Sonki,
I will try to make this a short reponse, as I have dealt with the same issues so many times and I could almost hear myself speak.
3) MSFT's true P/E is quite a bit higher than what it appears to be, and this is why a lot of shorts and put players got BURN big time. The strategy implemented by Bill Gates re. deferred earnings and other financial/accounting measures have enabled the company to conceal a lot of profits underneath the mattress. Wall Street professionals--not small investors--know this, and that is why they award this company a high p/e. For details, you might want to go back and review the hundreds of informative posts on this thread.
To give you an example: I bought most of my MSFT shares in mid-1995 at the split adjusted price of $30. Afterwards, I had wanted to sell when the stock doubled, tripled etc...but my broker talked me out of it, citing the reason as above.
3) If you examine closely, Microsoft's price has not dropped as much as Intel, certainly much less than IBM, CSCO or SUNW, in the recent correction beginning in mid-February. Today's rally, I think, was partially fueled by short-cover which, in the case of Microsoft, was of less intensity than the other tech big caps. Basically, there is only so much $$$ flowing through the equity markets, and when most of the dough went somewhere else, Microsoft "appeared" to be left out.
4) My understanding is that Microsoft has been purchasing shares back from the open market. And the timing of such purchse was frequently frequently unpredictable, being decided by a strategic reason (to precipitate a short squeeze, for example) as well as the stock price. I wouldn't be surprised if Bill Gates had been playing the market in order to kill the shorts (thus stabilizing the stock price and protecting shareholders value).
5) I am basically a long-term investor, thus date-to-date events don't sway my thinking as much as they might on other people. If you are also long-term, why not just revisit the long-term charts of Microsoft, pour yourself a glass of wine, and enjoy the weekend?
Regards,
Ibexx |
