How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 489.88

+0.6%

11:27 AM EST

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To: Paul Shread who wrote (8499)	6/17/1998 1:38:00 PM
From: Gerald Walls	Read Replies (3) of 74651

Lordy, someone puhleeze tell me why MSFT was a bargain at 50 times earnings and 16 times sales. At a forward growth rate under the rosiest scenarios of 30%, the company is overvalued by about 40%. For the same reason GE sells at over 30x with an EPS growth rate of 13-15%: reliability of earnings and liquidity. Quarter in and quarter out, GE (and MSFT) makes its money regardless of what else is going on in the world. The Price/Sales is 2.97 for GE and 16.06 for MSFT because their margins are 9% and 31% respectively. Higher margins should give higher P/S because more of each sale is profit. If you think MSFT numbers are out of whack and that it's 40% overvalued then, puhleeze, short away.

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