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

To: Hawkmoon who wrote (59785)	7/12/2001 11:28:42 PM
From: DiViT	Respond to of 74651

"MSFT apparently faces an $8.4 Billion dollar liability if its shares remain below $74/share" From your link: "Microsoft must pay part of an $8.4 billion put-option liability as early as this month. Microsoft manages the risk because not all the puts expire at the same time, a spokeswoman says. Some aren't due until March 2003, and the stock could rise by then. Microsoft can pay in stock and use the money it routinely spends buying back shares." You said: "...we're missing something in assessing actual units sold with regard to computer sales" Yes, MS revenues are not just derived only from software sold with each computer. Consider that their other businesses are starting to ramp, offsetting this weak PC market. "PC unitgrowth is dismal and Microsoft is still doing phenomenal. You kind of have to wonder what kind of numbers they could put up if PC units were better." -Greg Vogel, analyst at Banc of America Securities

To: Hawkmoon who wrote (59785)	7/12/2001 11:39:22 PM
From: Dave	Read Replies (1) \| Respond to of 74651

MSFT apparently faces an $8.4 Billion dollar liability if its shares remain below $74/share. That's not negative, it's a one-time charge. When their puts actually pay off, well that's just part of net income. Nothing fishy there, it's all in the 10-Q. But if, heaven forfend, it's a loss, that's okay because it's a write-off, as long as there is enough investment income to add to the net income to meet the lowered estimates. And I hardly believe, with the current slump in computer sales, that we're seeing increased sales of actual revenue from sales of software. That would simply defy simple logic. Never fear, logic is neither so easily defeated nor defied. Microsoft's increased revenues include investment income. Their operational earnings will be down this quarter. Call that a wacky prediction if you will. In the past, when MSFT was small enough to attain 50% earnings growth, MSFT was widely lauded for their conservative guidance and credible accounting. Now that their operational earnings are decreasing, they will soon be derided for shedding those scruples. Dave

To: Hawkmoon who wrote (59785)	7/12/2001 11:47:03 PM
From: Exacctnt	Read Replies (1) \| Respond to of 74651

<<<But another possibility as to why MSFT was able to beat revenues is likely due to aggressive PUT writing as a means of supporting their own stock, as opposed to increased sales in XP, since it isn't officially released until October, 2001.>>> Just how did Put writing increase MSFT's current revenues and earnings? Please indicate where it shows up on the income statement. Saying that MSFT faces an $8.4B liability if the share price remains below $74 is preposterous, especially if the source is non other than the self promoting Bill Parish. The increase in XP sales referred to by Bill F is XP Office sales which has already been launched earlier in the year.

To: Hawkmoon who wrote (59785)	7/13/2001 12:57:13 AM
From: David Howe	Read Replies (2) \| Respond to of 74651

Hawkmoon, Wow, where did you come from. Let's get you caught up, ok? << But another possibility as to why MSFT was able to beat revenues is likely due to aggressive PUT writing as a means of supporting their own stock >> First, put writing does not support the stock. Second, the so called liability is minimal and doesn't even come into play unless the stock is below about where it is now, quite a while from now. And, if the stock is below the strike price they simply buy stock. This is something they do every year in order to grant options to the employees. Your put writing comments don't actually have anything to do with this quarter's results. << as opposed to increased sales in XP, since it isn't officially released until October, 2001. >> The increased revenue is related to the release of Office XP which was last month. Obviously this has nothing to do with Win XP siince it hasn't launched. The main reason they had terrific revenue is that they are selling piles of software for servers and commercial customers that are buying Win 2000. This was launched a year ago, but is just now ramping up. And, it sells for quite a bit of money in comparison to the average consumer product like Win Me. << And I hardly believe, with the current slump in computer sales, that we're seeing increased sales of actual revenue from sales of software. That would simply defy simple logic. >> Maybe you should study up a bit. First, PC sales didn't fall of a cliff, they are about what they were last year. Some PC manufacturers are actually selling more PCs this year than last. It doesn't matter if they are selling them cheaper in the midst of a price war, MSFT makes the same $ whether a PC retailer sells the boxes at $700 or $1200. It's the same license revenue to MSFT. MSFT business is rock solid and their revenues could go up dramatically if PC sales rebounded in the future. IMO, Dave