How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 478.47

-1.1%

Dec 12 3:59 PM EST

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To: Dave who wrote (53759)	12/3/2000 9:16:29 PM
From: David Howe	Read Replies (1) of 74651

<< Buy GM (earnings growth 12.3%, P/E 5.5) or WBB (earnings growth 21.63%, P/E 6). >> Those aren't valid comparisons by any measure. GM is in a cyclical industry. Sure, they grew EPS by 12% this year, but the prior year, their EPS fell by 50%. Most would agree that manufacturing autos is a highly competitive, low margin, cyclical business. Hardly the same thing as the software industry. Especially considering MSFT is the out and out leader and has very little competition in a number of their key areas. WBB (old folks homes) has only moderate revenue growth and they seem to be growing EPS by cutting costs. That's not a business that inspires a lot of faith. Cut costs, the properties go down hill, the customer base starts to fall off and new ones don't like the run down facilities. This business could deteriorate quickly. It is also a highly competitive business. Practically anyone can build a few condos and call them a retirement community. No wonder they have such a low PE. It's a small company in a very risky business. Dave PS. Connors said that they feel the software industry is THE place to be right now and for the next "25 years". This is the age of software, and it's just beginning, IMO.

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