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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: taxman who wrote (35906)	1/1/2000 1:29:00 PM
From: ericneu	Respond to of 74651

Microsoft was up 69 percent this year through Thursday. But a repeat performance seems unlikely. --- Methinks this sounds vaguely familiar... Best wishes to everyone for the new year! - Eric

To: taxman who wrote (35906)	1/1/2000 1:49:00 PM
From: Steve Warkentin	Read Replies (1) \| Respond to of 74651

"But a repeat performance seems unlikely. " What are you basing this on? History has shown us that Gorilla tech stocks are usually awarded a higher valuation. No-one knows where the price of MSFT will be a year from now and I'm sure MSFT just might have some pleasant surprises for it's investors going forward. If anything at all, the overblown Y2K hype should maybe have taught us to forget about blanket predictions on future stock prices.

To: taxman who wrote (35906)	1/1/2000 9:58:00 PM
From: ed	Read Replies (1) \| Respond to of 74651

Well, every year , the analysts repeat the same talk and nothing materialized as always. The stock market made of human sentiment, you can predict the scientific effect based on mathematical models and physics, but you can never predict the human behavior and thinking . The traditional thinking said the PE should be equal to the growth rate, but in the new years, new thinking may say that the PE should be 4 times of growth rate or 10 times of growth rate depending on differrent industry. Anyway, I do not blame the analysts to make a prediction every year of this time to show his investors how good or profgessional he is , well, nobody will remember what the analysts were predicted at the end of the year, and the analysts can predict anything they wanted to at the begining of each year, anyhow , those analysts were not binded to any legal responsibility if the are proved to be wrong at the end of the year. Well, I can also give you some prediction , and what do you like to hear ?

To: taxman who wrote (35906)	1/1/2000 11:55:00 PM
From: greg nus	Read Replies (2) \| Respond to of 74651

Taxman, refer to Money Jan edition which discusses how undervalued MSFT is and how wallstreet has over looked msft investments in cable about $7 Billion now valued at $12 Billion. Were msft to issue tracking stock for its cable related businesses, and were they to get the industry average multiple of 43 Msft holding would be worth $38 billion or about $24 billion of unrecognized value. Add that to msft retained earnings and a share msft would be worth around $300.

To: taxman who wrote (35906)	1/2/2000 12:32:00 AM
From: taxman	Read Replies (1) \| Respond to of 74651

bloomberg's dorfman likes dogs just because they are cheap. i have learned that you get what you pay for. good companies are expensive and get more expensive. crappy companies are cheap because they are crappy. regards

To: taxman who wrote (35906)	1/2/2000 1:43:00 PM
From: Valley Girl	Read Replies (1) \| Respond to of 74651

Others have pointed out the fact that the market's a slave to fashion and not been terribly interested in fundamentals of late, so I won't belabor it. Stocks that are in vogue keep going up, while others languish. To some extent it's because of the market's focus on momentum, but to some extent this is supported by the "winner take all" fundamentals of high-tech industry (just look around at MSFT, ORCL, CSCO, INTC, SUNW, QCOM, etc.) It might interest you to know that the P/E=growth rate rule was and is an oversimplification of a more complex calculation that discounts future earnings back to the present using a risk-adjusted interest rate. This rate is based on the so-called risk-free rate, for which the current rate on the long bond is a reasonable surrogate (this rate in turn accounts for inflation). Coming up with the correct discount rate's a bit of a trick, since you're trying to assess how much to increase the discount based on the level of "risk". But you can just let the market do this for you by assuming that MSFT is no riskier than the "average" stock on the market. Suppose the average stock on the market is growing at 10% (including dividend payout, if any), and has a 25 P/E. Then MSFT's superiour five-year growth rate, say 35%, is worth (1.35/1.1) to the fifth power, or 2.78 times the average P/E, or about 70. That calculation made a whole bunch of assumptions that may not be correct, to wit: a) 10% growth is actually worth 25 P/E given today's level of interest rates and forward risk (historical average over the past century was more like 14% for 15-20 P/E with rates about the same as they are today). b) MSFT grows earnings 35% compounded over 5 years, then reverts to the mean, e.g. in 2005 it reaches a terminal valuation of 25 P/E and has only average growth prospects going forward. You could get higher or lower numbers, depending on what growth rate you want to drop in and the number of years you want to run it forward. For example, a lowly 25% growth rate, sustainable for 10 years, would give you a 90 P/E. As PMSW points out, the risk-free rate has been in decline for the past few years, and this has had the effect of lowering the rate at which future earnings get discounted, and hence has pushed up trailing P/E ratios. However, the real risk-free rate (that's where you take inflation out) has actually remained relatively high compared to historical averages. Also, there has recently been a disturbing reversal in this trend, which was not accompanied by a corresponding decline in P/E ratios. The last time this happened was the few months prior to the 1987 correction. Let's hope Greenspan finds some way to give us a softer landing this time! Happy New Year!

To: taxman who wrote (35906)	1/6/2000 1:24:00 PM
From: Reginald Middleton	Read Replies (1) \| Respond to of 74651

How in the world are you going to value Microsoft's future cash flow streams on a multiple of historical cash flow streams. That is like driving a car with a map that only shows the road behind you. A bit dangerous wouldn't you say??? MSFT has significant value locked up if you look at the comparables. Current Target Earnings $8,764,000,000 Microsoft's Breakup Value based on comparables: $1,381,623,543,142.94 Microsoft's Current Market Value: $ 469,720,000,000 Percent Over/Under Valued: 294.1% See the "Future of Computing" for the full report at nuomedia.com. You can even download a copy of the QuickComps valuation template to play with if you register.