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

To: johnd who wrote (43474)	4/25/2000 8:50:00 PM
From: johnd	Respond to of 74651

Here is one of those Chaff. From: Jacob Snyder Tuesday, Apr 25, 2000 1:50 PM ET Reply # of 43474 now above 69; think we'll close the gap to 73 by the close? Maybe a down day later this week, to flush out the last margin? Or maybe no more margin calls, and just a steady move up? This stock will go sharply up or down, I don't think it'll move sideways. For the short-term (maybe very short-term) the movement is up.

To: johnd who wrote (43474)	4/25/2000 10:02:00 PM
From: Jacob Snyder	Respond to of 74651

RE: Point is there will some people who will be bullish, some who are bearish No, the point is, some people made money, and some didn't. Making money in stocks is an attempt to predict the future. Some people did a better job at that than others. Anyone who is habitually bearish, or habitually bullish, doesn't do a good job of predicting the future. I thought it would be interesting to see what people were saying, as MSFT was cresting, and on the verge of losing a few hundred billion in market cap. I posted all the cautionary posts I could find. All 3 of them. And I had to wade through oceans of wild euphoria to find them. My point is that this thread was, and is, far too bullish. I posted yesterday that I'd just taken a large position in MSFT, including 2002 LEAPs, when the stock was at 66. I also posted, for several weeks before then, why I was not yet ready to buy. You are welcome to repost that in the future. I'm confident that, from this buy-in price, I'll make money longterm. I also still have 20% cash, to buy any further dips, in MSFT or a few other stocks I'm following.

To: johnd who wrote (43474)	4/25/2000 11:22:00 PM
From: Jacob Snyder	Respond to of 74651

I'll pick up that gauntlet. MSFT stock price on 1-1-01: 88 From late 1997 on (the Internet Era), the stock has had a trailing PE range of about 40-80. Now at the bottom end of that range (which is why I just loaded up). The middle of that range is 60. But, the antitrust case will not be settled by then (unless Gates learns humility, and Ballmer learns flexibility, which is unlikely). And the Fed is going to keep raising till the economy slows, which will take most of the rest of this year (1/4 point of torture at a time), and the techs will feel their share of the pain. So, I think (guess, really) the stock will only climb to a PE of 50 by year-end. Now, what will MSFT's trailing PE be? On 1-1-01, they will be getting ready to report 2Q earnings. Reported earnings for the previous 4 quarters will be .47, .43, .43, and .43. The first two numbers are history. The second two are conservative guesses. Before the recent conference call, I thought they would beat estimates by .03 per quarter. Now, I don't think so. Add them up, multiply by a trailing PE of 50, and I get 88. MSFT stock price on 1-1-02: 122 This guess, of course, is likely to be more inaccurate than the one above. By the end of 2001, I think the Fed will have finished raising, and any slowdown in the overall economy (soft landing hopefully) will be past. The antitrust issue will be resolved, or at least the general shape of a settlement will be sketched out, and the uncertainty will be reduced. Over half of U.S. households, and almost all businesses, will be connected to the internet, using equipment (on both ends of the connection) that uses a lot of Microsoft products. So, I guess the trailing PE will be back to 60, the middle of the Internet Era range. EPS reported during calendar year 2001 will be .49, .49, .53, .53. The sum is 2.04, times 60 equals 122. These, by the way, I will consider to be excellent returns. If you don't think so, then you need to lower your expectations. I would like you and all the regular posters to give your 1-1-01 and 1-1-02 stock price predictions. Assume no stock splits. Mostly, I'd like to hear everyone's reasoning. And you are welcome to repost our guesses, and reasoning, in 8 months.