How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 478.04

-1.1%

Jan 8 3:59 PM EST

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To: johnd who wrote (49884)	9/25/2000 6:40:35 PM
From: Dave	Read Replies (2) of 74651

"Dell said 30% growth this Q. IDC - 18.5% for PC, FHI, PC data had solid growth reports. Even Intel after the down revision will growth 17.5% yr over year. How can Microsoft not do well? Even Microsoft Snr. VP of sales said 30% growth soon and CFO said "feels good going forward" what am i missing?" Maybe you're missing this: MSFT's P/E is 37. Even if their growth rate is 17.5% this year, they're still arguably 2x overvalued. If you account for uncertainty regarding their future relevance and uncertainty regarding their future corporate structure, it looks even worse. Another thing to consider is that when MSFT's profits DO increase, they don't reinvest a big percentage in R&D (it's a big absolute amount, but a small percentage). Rather, they place their profits in strategic investments, often in companies whom they wish to persuade to use WinCE. Obviously the strategy behind these investments has been failing so you can argue that MSFT is throwing its profit growth away. The best thing MSFT could do now would be to offer dividends. Then at least some of the poor suckers who have been throwing good money after bad into MSFT could get a little bit back.

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