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Strategies & Market Trends : Buffettology -- Ignore unavailable to you. Want to Upgrade?

To: Daniel Chisholm who wrote (2696)	12/18/2000 4:50:27 PM
From: Jurgis Bekepuris	Respond to of 4690

Daniel, Hmm, I am so weak in valuation issues that I won't try to explain myself out. The thing that I like about MSFT is its gorrilla'ness (as in "Gorilla Game" :-))), though some people would say that this is declining or disappearing as the PC growth wanes. This is also related to Buffett criteria, such as high margins, high free cash flow, earnings sustainability, etc. I agree that MSFT is not a value stock. That is why I never discussed it on "Value Investing" thread. However now it is reasonably valued compared to other tech gorillas (e.g. CSCO). It is said that "tech value stock" is the most dangerous thing, because they do not exist. We'll see if this is the case with MSFT and INTC. MSFT is not a Buffett stock in the sense that it can become quickly obsolete (see IBM). However, I think that current concerns are overblown, and MSFT can deliver another 5 years or so of good growth. Can it deliver a decade? No one knows. Finally, I am mid-term holder. If MSFT goes to ~$70 tomorrow, I will sell half position. So don't ask me to justify 10 year holding. But then there are VERY FEW stocks that could be held for 10 years (and I just missed RAL @ $18 this year - SLAP!!! :-(((( ) Take care Jurgis

To: Daniel Chisholm who wrote (2696)	12/19/2000 10:19:47 AM
From: Bob Rudd	Respond to of 4690

Dan: I sold MSFT as it broke support - I was looking for another bounce that was a no show. MSFT is clearly at an inflection point and given overall tone of market could go considerabley lower. I suspect that it is in a value range but can become a much deeper value in unfavorable market. I think that MSFT has shown capability to manage change and that the 'death of the PC' is a bit premature.

To: Daniel Chisholm who wrote (2696)	12/20/2000 12:06:28 AM
From: Shane M	Read Replies (2) \| Respond to of 4690

Daniel, I'm currently out of MSFT - took losses for capital gains. On a price performance basis this was my worst performing buy of the year. I guess the most appealing aspect of Microsoft is the dominating presence in the marketplace - it's gorilla-ness as Jurgis said. Extremely high barriers to entry and high switching costs. In many of MSFT's product lines there's simply no viable competitor in the marketplace. Business as I know it could not exist without MSFT. This character lends a predictability to MSFT's business that many techs can't have. The anti-MSFTers will argue that businesses are stupid for depending on MSFT - that there are better alternatives out there. I simply don't buy it. Companies wish to become the next MSFT. MSFT is on top and constantly works to remain on top. The internet is gradually lowering the barriers MSFT has errected and does pose a challenge to the client-server model that MSFT owns, but I agree with Daniel that the fear of the death of the PC is exaggerated. While internet apps might one day eliminate Windows and the need for client side OS such as Windows, I feel there's a lot of time between here and there and feel like MSFT has a flexible attitude allowing them to adapt. MSFT will not die clinging to Windows. Another thing on MSFT's side: the software industry as a whole has a lot invested in MSFT's success. For every company trying to knock off MSFT, there are two whose business success is dependent upon MSFT's success and who are working to ensure MSFT success. Well, I've talked long enough, but that's my investment perspective. I feel like the competitive advantage angle is the most important element of the MSFT story. Obviously, if you don't buy into the persistence of the competitive advantage, you'll come to a different conclusion on the stock because nobody can maintain margins like MSFT without it. Shane