How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 492.01

+1.3%

Nov 28 9:30 AM EST

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To: werefrog who wrote (4504)	12/25/1997 7:29:00 PM
From: Bearded One	Read Replies (2) of 74651

Stocks are ultimately driven long term by earnings. Does not MSFT have record earnings Record for what? Exxon, IBM, and several other companies all have more earnings than Microsoft, both per-share and overall. If you want to look at future earnings, then paying $120 for Microsoft implies (under current economic conditions) that you estimate that long-term, Microsoft will be earning above $7.20 a share (compare to a 10 year bond which is paying 6%). At $150, the estimation was for $9.00 a share. Compare to current estimates of around $3.00 a share. When a fine stock like MSFT has short term bad news, is this not a good time to buy? It depends. A gunshot wound is short term bad news, but there may be long-term implications. I think that the DOJ deciding that Microsoft's internet strategies are anticompetitive is long-term bad news for the company. Plus, Microsoft has done enough damage to its public reputation in the last few weeks that it may take years to regain the public trust it has lost. Now where is going to get its new revenue? I'm glad that you were able to play trading ranges for a while. That doesn't mean that you won't get burned as investors get smarter. One day, everyone will stop buying the dips and trading ranges will be history. But until then, best of luck to you.

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