How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 492.01

+1.3%

Nov 28 9:30 AM EST

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To: ToySoldier who wrote (16189)	2/17/1999 9:37:00 AM
From: Lee Martin	Read Replies (4) of 74651

A couple of weeks ago I posted my reasons for avoiding DELL and stated that my only two holdings were MSFT and AOL (actually NSCP as a cheaper way to play AOL). Well sadly I was right about DELL. From what I've read DELL missed its revenue target and increased its profit margin because they weren't passing along component price drops fast enough. They indicated that they would be more aggressive in cutting prices which would result in increasing revenue at the expense of profit margin. Can you say price war? That what it sounds like to me as CPQ,HWP,IBM etc. will respond to cuts by DELL in an attempt to hold onto market share. Who benefits from reduced PC prices? 1. consumer- lower prices lead to greater demand 2. MSFT- greater PC demand=greater OS revenue as price of OS is independent of price of PC. 3. AOL- main use of cheap PC's is to access net. Most consumers access the net through AOL. In other words, more cheap PC's=more new AOL subsribers. 4. EMC,CSCO- benefit from increased net traffic OK,so the question is will knowing all of the above do us any good? Will investors be able to look at the DELL report and figure out who benefits, or will they just dump everything labeled tech? My guess is they aren't smart enough to sort out winners and losers and will sell everything based on negative sentiment toward techs. Hopefully, the negative sentiment re. MSFT coming out of the trial has peaked since it will go on hiatus in a couple of weeks and the gov't and media will focus on the start of the INTC trial. The AOL/NSCP deal should close in MAR and that should give MSFT some more evidence that they do in fact have competition. Bottom line- I think the techs are going to tank and rather than try to pick winners I should have sold at the first sign of trouble. AFTER the selling is over the smart $ will be back in the above names big time as the fund mangers who own them will come out and say they are now cheap and then up we go again. Comments? Regards,Lee

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