How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 494.55

-0.6%

12:10 PM EST

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To: johnd who wrote (5188)	2/20/1998 10:12:00 AM
From: Ed Schultz	Read Replies (2) of 74651

johnd, Although I agree they could have reported an 8% in additional revenue, I disagree in the interpretation. You make it seem like it is no big deal. This is incorrect. First, the 8% additional revenue could easily translate into a rise of 25% in profits (not 8% like you imply). This is a big deal. But more importantly is the growth rate which goes a long way to determining the PE. You claim they had $13B in revenue in the past year with an additional $1B declared as unearned. The year before they had $10B in revenue. So, is the growth rate 30% or 40%? This is a VERY BIG deal. Because of the amount being set aside as unearned income, the profits and growth rate of the company are being grossly underestimated. Ed

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