>Salomon Pounds Table On Microsoft, Says Now Is Time To Buy (MSFT)
Is Salomon still pounding Table On Microsoft????
(NewsTraders.com)-- Salomon Smith Barney analyst Neil Herman today pounded the table on
Microsoft (MSFT) and advised clients to get in on the stock at
current levels ahead of a number of catalysts he
sees on the horizon.
The government's marathon antitrust case against Microsoft is one of the biggest anchors
holding down the company's stock, however, Herman puts a 60%-plus
chance that the case will be settled out of
court, possibly right before the judge rules in March or April.
"We think such a settlement would cause the stock to soar," Herman said, but he concedes that
other Wall Street analysts aren't as convinced that a
settlement is likely.
Another reason the Redmond, Wash.-based company's shares are more than 20% off their
52-week high is that investors aren't viewing the company as a "new
economy" player given its late entry into the
Internet business, which the analyst thinks is a great misconception.
Microsoft gets little credit for MSN.com even though it registered No. 3 in hits after America
Online (AOL) and Yahoo (YHOO), he said. Herman also pointed
out that the company has $20 billion in
Internet-related investments on its balance sheet, which he believes are more likely worth in
excess of $30 billion.
Earnings concerns are also weighing on the stock, and Microsoft Chief Financial Officer John
Connors, named to the post on Dec. 22, may not exude the same
comfort and confidence as his predecessor,
Greg Maffei.
Herman isn't concerned and remains comfortable with fiscal third-quarter (ending Mar. 31)
estimates of $5.94 billion in revenues and $0.41 in per-share
earnings.
The Zacks consensus EPS estimate is in line with Herman's number.
Investors are also wondering when Microsoft's Windows 2000 software product will begin to
impact earnings. Herman believes a "massive adoption" by corporate
and consumer users will kick in during the
third and fourth quarters of calendar 2000, which implies Wall Street's attention on Microsoft
shares will start in the April to June period.
"We want to be in front of this," he said. "We want to buy Microsoft now."
Copyright 2000 NewsTraders Inc. All Rights Reserved 15:49 Wednesday, March 01, 2000 |
