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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: BGR who wrote (74105)11/7/1999 6:59:00 PM
From: Siddhartha Gautama  Read Replies (1) of 86076
 
Leaving Microsoft aside, the largest software company is Oracle with a market cap of 80 billion dollars. Four "Baby Bills" will be of comparable size - some smaller and some same size, but none larger. That should give it a market cap of 4*84 = 336 billion dollars which is a 30% haircut on its present market cap of 470 billion dollars.

Alternatively, you can look at the business units of Microsoft, viz:

1. Microsoft Windows four times bigger than Novell
2. Microsoft Office two times bigger than Corel
3. Microsoft Tools two times bigger than Symantec
4. Microsoft Backoffice less than half the size of Oracle
5. Microsoft Internet Sites less than one fourth the size of AOL
6. Microsoft Miscellanea about the size of Sony

Based on these very crude estimates Microsoft market cap should be around 4*7 + 2 * 0.5 + 2 * 3 + 0.5 * 84 + 0.25 * 163 + 66 = 184 billion dollars.

Actually, the valuation for Corel should be multiplied by 10 or so to get a valuation in a no-monopoly situation. This would change the second value in the summation to 2 * 0.5 * 10 = 10 billion adding 9 more billions to 184 resulting in 193 billion dollars.

Now, this would imply a greater than 50% haircut, wouldn't it?

Or am I dreaming? :)
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