Sal, some random thoughts.
1. Microsoft's stock is clearly (to me at least) inflated relative to its fundamendals AND market franchise. The stock is up seven-fold since mid 1993, essentially on the back of the upgrade cycle to 32-bit Windows 95/NT Workstation & Office 95, and to a lesser extent, Windows N/T Server and Office 97. What's next? We know they're not making a dime from their internet software, and that they're burning cash on content. They have even buried their content losses and I-way products under R&D.
2. Microsoft finds itself in the position of being unable to reinvest its profits at its historic rate of return...a sign of maturing (read slowing) growth.
3. MSFT is going to do whatever with or without the Barron's push. My guess is (considering my belief that we are now in a bear market) it may give back 40% of its 1993-97 advance over time to about $80-90. Then again, stocks always seem to correct 10% more than you think they will.
4. Any serious break here in the stock would have the chilling effect of sending most tech indices(e.g. MSH, PSE, CWX of which it is the most heavily-weighted component)into bear-confirmed status. The tech indices of which is isn't part, the SOX and NWX, are teetering anyway. I agree with you that such contagon would be more than unfortunate for smaller tech stocks. |
