To All, Microsoft pulled the old "trash eps so much that bad eps growth looks good" trick again. And, investors, like Charlie Brown when Lucy holds the football, fell for it again. All of this "wonderful results" and "the inventory correction is over" euphoria is just a strong perfume that covers the true stink. Here are a few smelly points I noted:
1. The quarter's growth, with the new #s, will be just above 20 pct. The stock is selling for 55 times trailing 12 months eps. I know that growth rates do not have to be as high as pe ratios in this low interest rate market, but I think nearly three times higher than the growth rate makes for a very pricey pe ratio. Especially when MSFT again emphasizes that growth is slowing. It looks to me that the fall to single digit growth rates is certainly still intact and only MSFT predicting it will happen immediately makes this look like a decent quarter.
2. MSFT is a price-gouging monopoly. Their results have nothing to do with anyone else who does not have monopoly or, at least, oligopoly pricing power. The idea that IBM or MU or MOT will go up, when they have NO pricing power, just because MSFT has muscles to flex, is ludicrous. I know it happens every quarter during this mania, but just because you howl at the Moon on schedule does not make it a sane activity. -g-
So, another scam-a-rama pushing a market that wants to go up even if it can't find a good reason. Good luck, MB |
