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

To: Dave who wrote (52755)	11/7/2000 12:11:41 PM
From: ThomasG	Read Replies (2) \| Respond to of 74651

Re: "MSFT makes money in Desktop software and in Office software. The rest of their business loses money. Check their quarterly statement" MSFt currently makes its money predominantly from desktop operating systems and Office, but the real potential in the future for MSFT is the sales of enterprise software. Products such as; SQL Server 2000, Windows 2000 (the range of products for the server) and exchange 2000 (Not to mention biztalk server etc). Will enable MSFT to significantly increase its market share in this market. MSFT currently only sells $4bn of enterprise software. They can be expected to grow this segment by 35% to 40% compound pa. This will result in annual sales of $21bn by 2004/2005. The enterprise market is easily big enough to enable MSFT to capture this revenue. In the meantime they can continue to grow the desktop and office market by 10% to 15% annually, Given that this is a $16bn annual revenue, this is a very nice cash cow. At 15% annual growth, this becomes a $32bn segment Add in Consumer , currently $1.6bn, growing at 50% pa becomes an $8bn segment in FY05 Therefore total revenue in FY05 will be approx $66bn (others make up the remaining $5bn) This would put the shares at $250 in FY05 at a pe of 50. I am very happy to invest in MSFT at $70 current and enjoy a 37% compound rate of return over the next 4 years.