Microsoft is a monopoly, period.
I have been in and out of Microsoft for the past 8 years. It was one of the 1st stocks I bought (and regretfully, sold). I've quit looking at its PE, PS ... I just buy it now when it moves sideways at or below its 50 day moving avg and buy short term puts when it becomes overbought (as in today), or sell covered calls.
Microsoft is a monopoly. When people have a choice between Windows 98 or Windows 95, what kind of choice is that, really. The same PC you bought 3 years ago, you could buy for less than half the price. Yet, Microsoft still sells Windows at $90, instead of $45. If Microsoft has only 50% of the OS market or 50% of the Windows Apps market, they would be selling their software at 50% off to stay in the game. NOw how many companies can dictate their own prices? That's why it has a huge premium. It's growth rate is slowing, yes, but look at its profit margin and return to equity. These tell you that the company is just about printing money. It has control of its own destiny. Maybe at some pt it will grow at 15% annually, but if it can do that for the next 10 years, I'm sure it will make a lot of us happy.
P.S. I've promised myself never to go against my Uncle Bill. However,
there is 1 company that is poised to be bigger than Microsoft. And it has Uncle Bill's blessings. |
