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Technology Stocks : How high will Microsoft fly?
MSFT 510.37+1.4%3:59 PM EST
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To: ToySoldier who wrote (11182)10/8/1998 1:00:00 PM
From: johnd  Read Replies (1) of 74651
 
In a panic, how low a stock can go? It is function
of how deep is the panic. Currently I think there
is a lot of margin call driven selling. In addition,
lot of fund managers just keep dumping baskets of
S&P or NASDAQ100. I always felt CSCO was vulnerable
due competition from larger Lucent and Nortel. I also
felt DELL was vulnerable because thier only advantage
of direct sales model and accompanying JIT leading
to low cost, was breakable by larger competitors
like Compaq, HP and IBM. Intel always worried me with
AMD, Cyrix, IDT as low price competitors. YHOO and
AMZN are bunch of promises. They will be subjects
of serious damage, only a matter of time.

But I feel still quite sound about MSFT business. The OS
and app business is virtually invulnerable to competition,
the barreir for entry is very high.

Mr. market is giving all of us MSFT at 44 PE right now.
The company now has a PEG ratio of less than 1. Deep
discount sales indeep. Even though this PE is aorund the
historical growth rate of 46% for MSFT, when interest
rates are as low as they are now, MSFT derserves a PEG
of about 1.5 or about 62 PE.

Other than the company itself, there isn't many buying,
there is no confidant money to buy. It is only when
wall street mood turns positive that the stock will
move up.

johnd
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