The only reason Microsoft might not make it to $400 3 years from now are as follows:
1. They would have a valuation of close to 1/2 trillion dollars. That is absurd in anyones book.
2. If they got that "rich", DOJ would be forced to intervene.
3. Since PE is forward looking, it would be extremely difficult for a $33B company to have a PE of 50. 35 might be more appropriate for a 30% reduction in stock value (to 280).
But you are wrong that Microsoft has hit its high. The best years are still ahead. Regardless of whay you may think about NT5, it will be a MAJOR hit. You still haven't answered why HP, IBM, and KPMG have adopted NT? You have mentioned nothing of the fact that Unix share is declining rapidly? Or that NT is still growing at 80% per year? Or that all the major research firms are predicting stellar growth for NT5?
When E-Commerce explodes, what machines do you think they are going to be using? NT only has about 10% market share today. 3 years from now it will be more than 50%! Every big business as well as every mom and pop is going to have to be on the Net or else they will not be in business. Everyone of them will have to have an OS with associated software. And where are all of them going to by it from? Granted, predictions can be wrong, but why buck ALL of them? We are in a sea change that is ENORMOUS and will be for quite some time. The only question is how much will Microsoft get? Knowing Microsoft and the people that work there, they are going to do their darnest to get a nice cut of the pie!
The other part I disagree with you is on market slowdown. The problem with America today is that we collectively have way too much money. Inflation is dead and unemployment is way low. The major threat is deflation. But the main reason we are as successful as we are now is because this country has hopped on the productivity badwagon with a passion! No other country comes close. Furthermore, we are now entering a baby boom that is rivaling the original one in the 60s.
I agree that because of the Asian turmoil that things might not be too rosy for the next several months. However, all of that will blow over. With the amount of money available to investors, it has to go somewhere. And that somewhere is going to be in stocks. And if you are going to pick a consistent winner, might as well pick Microsoft! |
