How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 488.02

+0.2%

Dec 24 12:59 PM EST

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To: johnd who wrote (52342)	10/27/2000 5:04:57 PM
From: Dave	Read Replies (2) of 74651

"30B * 45% net margin => 13.5B/5.3B => 2.55 * 60 => 153; Get the idea?" Your math is right, but your numbers are unrealistic. They're unlikely to earn 2.55 next year. The consensus estimate is 1.92--this is a company with declining operating earnings, not growing--and the days when a 60 P/E was normal are nearly over (although nobody's told SUNW and CSCO yet). At a generous P/E of 15 (not bad for a company with estimated 12% profit growth in 2001 and 10% in 2002, who depends on a strong stock market for investment income to make those numbers), how about 1.92 * 15 = 30. That sounds fairer. Then discount the DOJ case and growing public antipathy, and $20/share should be a good target price. Dave

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