Bruce,
A couple of things to note:
1) MSFT has been saying their stock is overvalued for YEARS, not months.
2) MSFT has been crying-poor (lowballing analysts by saying that growth will slow) for YEARS (and Ian, Cisco is not at all good at that, IMO. In fact, CSCO isn't at all known for lowballing, and if they try it they will adversely affect the stock (unlike MSFT). Furthermore, there is no other company in the world which is even in the same league as MSFT in terms of lowballing).
3) Barrons isn't powerful enough to bring down a stock like MSFT--at least, not significantly and not for long. Microsoft will have to faulter or the market will have to sink. That's what will bring down MSFT, not some stupid article by a ignorant author writing for Barrons Magazine.
4) This is the first time in all those years of MSFT trying to bring down their stock that they stopped buying back their stock. You can take that to mean that MSFT truely does believe that their stock is overpriced (if that is the case, this news came out back in July, so it's nothing new). However, the Street had become so accustomed to hearing MSFT warn of slower growth that they didn't believe it anymore. And thus, MSFT had to take more drastic measures to throw a scare into Wall Street (they did so in July, and since then, the stock has "slid" (a totally improper word used by the moron who wrote the barrons article) a whopping 6% in 3 months. Yes yes, such a horrific "slide" for MSFT investors! And oh by the way, the Dow and S&P500 are down more than 6% for their respective highs.
5) If MSFT goes down, the rest of the stock market (and especially tech stocks) will go down. In fact, MSFT will go down *LESS* than the other tech stocks (note MSFT's stock action compared to other techs during the corrections in Spring '97, June-July '96, and September '95-January 96). So if you're bearish on MSFT, then you should go short something else.
6) You said that MSFT's fall could be worse than CYMI...Are you kidding??? Stocks in small companies like CYMI are easily capable of falling 50% in a very short time because they are not proven/trusted companies. Stocks in large, established, bellwheter, trusted, proven, etc., companies like MSFT are not capable of such thing, barring a severe market crash. Are you feeling lucky?
Very irritated,
Sal Habash
PS. I don't like the manner in which the Barrons article was presented.
The author also used incorrect information (at times) to make/strengthen his points (which were, BTW, improperly stated as
fact rather than opinion/argument). Further, the article made a number of invalid assumptions.
As soon as I find the time, I will send a line-by-line letter to the editor at Barrons with my disgust. I'll post that at the MSFT Internet Explorer vs. NSCP Navigator thread here at SI. |
