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

To: Jim McMannis who wrote (39691)	3/23/2000 5:47:00 PM
From: Captain Jack	Respond to of 74651

PALO ALTO, Calif., March 23 (Reuters) - Cisco Systems Inc., the world's biggest maker of equipment that powers the Internet, on Thursday briefly topped Microsoft Corp., the computer software giant, as the world's most valuable company. The two companies are now locked in a virtual dead heat but a clear trend began to emerge months ago. Microsoft's <MSFT.O> share price has changed little since mid-July while Cisco's stock has surged. Based on its intraday trading high, San Jose, Calif.-based Cisco <CSCO.O> had a stock market value of $575.93 billion on 7.296 billion shares outstanding on a fully diluted basis -- assuming all stock options and warrants were exercised -- and a stock price of 78-15/16. Cisco split its stock on a 2-for-1 basis on Thursday. The stock closed up 5-5/8 at 77-13/16. Microsoft's market capitalization, based on its intraday high of 111-1/8 and 5.177 billion shares outstanding on a fully diluted basis was $575.29 billion. Microsoft stock rose 8-5/8 to 111-7/8 in trading on the Nasdaq amid fresh optimism that mediation talks in the landmark Microsoft antitrust case would produce a settlement. At those prices, the difference in stock market values between the two companies was a scant $640 million, or 0.11 percent. But by the close of trading, Microsoft had regained its lead on Cisco with a stock market value of $584.35 billion compared with $567.72 billion for Cisco. Microsoft, along with chipmaker Intel Corp., have been largely responsible for driving the personal computer age and clearly the PC isn't going away. About 120 million PCs are expected to be sold this year worldwide, and the market is still strong. "Basically what it says is that the dominant companies of the Internet are extremely valuable and Cisco is one of those," said Ted Schadler, director of the business-to-business group at Forrester Research. With the explosion of the World Wide Web and the Internet beginning in 1993, shares of companies such as Cisco, Yahoo! Inc. <YHOO.O> and others have soared as businesses, consumers and governments worldwide seek to modernize their networks and operations using the global network. While profits for both Microsoft and Cisco surge ahead, investors have in recent months afforded companies such as Cisco and database software provider Oracle Corp. <ORCL.O> higher than average price-to-earnings ratios. That reflects optimism that the torrid growth of the Internet will help to push their profits even higher. On Wednesday, Cisco's market value topped $500 billion, a first for a Silicon Valley company, and analysts have said that Cisco could -- if its growth continues -- become the first company ever to be valued at $1 trillion. "It's conceivable," Schadler said when asked if Cisco would eventually be a trillion-dollar company. "They probably both will." In November, Cisco topped Intel to become the most highly valued company in Silicon Valley. Analysts said then that it showed how the worlds of communications and high-tech are now colliding at near Internet speed. Intel, along with other high-tech stalwarts such as Hewlett-Packard Co. <HWP.N> are now moving quickly into faster-growing areas related to the Internet and telecommunications, such as wireless networking and communications, networking and Web hosting -- the business of carrying Web sites on computers and charging customers for it. "Microsoft and Cisco are the leading bellwether tech companies out there. It's been somewhat of a bragging rights thing," said Brian Goodstadt, an analyst with the Standard & Poor Equity Group. "It certainly validates the networked economy that Cisco is revolutionizing. I wouldn't say it takes away from the rest of the industry, like PCs, because it all benefits from the Internet," Goodstadt said. (( duncan.martell@reuters.com // +1 650 846-5401 ))