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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Timetobuy who wrote (81008)	7/31/2001 11:08:42 AM
From: t2	Read Replies (1) \| Respond to of 99985

What part of stable does msft look like? It closed near the low of the day. It couldn't hold the rally it had. Looks weak to me. If it breaks 64, it's going to the 50's. In fact, the chart is beginning to look like alot of the high fliers did last year. Sorry about the late response. The reason I say MSFT is stable is that there were all kinds of stories circulating about the government trying to block the launch of Windows XP. If successful, it would be a "nuclear winter" as one commentator put it. When such strong commentary was floating around, it was understandable why the stock would go down---last week. I see the news of last week as being absorbed by the market. The possibility is very slim that the government would actually try to block the sale...if they were to take action, it would likely be a request to modify. Even that is given a slim chance of success. I won't be surprised to see the low 50's in msft and maybe even lower. Ballmer said the next few quarters don't matter. That tells me he thinks earnings are going to have to be guided down. You should have seen the webcast of the analyst meeting last week. MSFT is basing its EPS on a PC demand that is about 5% lower than what IDC has been forecasting. That gives them a big cushion. If MSFT is wrong, there is upside to their earnings. IMHO, they are lowballing the potential EPS gains from launch of XP--they want to be in a position to guide higher or beat estimates. That was my take away from the analyst meeting of last week. That is why in the PC sector, MSFT looks to be the company with the most conservative forecasts. In addition, its valuation is good and the cash level is enormous--it does not make sense to group this stock with other techs that are facing losses. It is a monopoly and price competition in the PC sector, means more money for MSFT. I also like Intel also---believe that it is also about to regain its near monopoly status--meaning there is more upside to this one. I expect the launch of XP to push Intel's market share to near monopoly levels...and profitability is sure to increase. I would also note that MSFT was bought up by funds first half of 2001 and not Intel. Creates more demand of INTC. I like both! JMHO