Chuzz,
You wrote "The fundamentals of this company remain excellent. What has changed is the growth outlook. According to the company this is 25% - 35% over the next year or so, and they attributed the decline in growth to diversion of budgets to meet Y2K problems and the impact of a global slowdown. The company has an exceptionally strong balance sheet. The problem is one of valuation, which at this point is problematic because of the poor visibility going forward."
I agree with your opinion.
The funny thing is, SAP said in their report also something about slowing growth (reason asia) and loose just 5% stock value, where PSFT looses 23% stock value. Still SAP bare a much higher PE than PSFT. I wonder why the stock market acts so different on the same news.
I hold PSFT since more than a year, bought around 30$, saw it rise above 50$ (didn't sell, was to greedy to get more $$$) and am now annoyed at 19,75$ a share these days (won't sell, do not accept loss). That is the bad part of the story.
The good part is that I bought at a PE of 100 (think of it). As mentioned before, no company can grow 100% for long. Now we are in a range that can be sustained longer, and the downside risk diminished. From hindsight today would have been a better buy, but that's no art. I still like to own a highly profitable company with strong balance sheet in a growing industry at number 2 position (I also own #1 SAP)that has many good Years in front of it.
I believe over the long time the stock price will (more or less, and only loosely coupled) follow the underlying business, that are sales and earnings.
Show me a better company in this sector, then I may decide to sell. Otherwise I will hold for long!
I cannot securely time the market, nor can I trade short term with success. I'm no gambler. I just can pick a fine company, watch it grow and wait. What more could an investor do?
Lutz |
