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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator
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To: Gerald R. Lampton who wrote (3102)11/18/1996 5:19:00 AM
From: Frodo Baxter   of 24154
 
Where'd you learn to value stocks, the Motley Fool? ;)

If you use PEG (the Fool ratio) analysis, Microsoft tends to come out beyond fair value. But you ought to use DCF when everybody else does. Try valuing Coke with PEG... it don't work too good.

Also, market caps are irrelevant... I keep hearing: Intel has a market cap of $100 billion; how's it gonna grow 40% annually? Answer: by selling more chips. True, you can make an argument for market saturation and whatnot, but that's independent of market cap. In the case of Microsoft, NT 4/5 should open up a high-margin revenue spigot for a couple years. 40% revenue growth next year is completely within the realm of possibility. Earnings growth? Who knows.
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