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

To: Timetobuy who wrote (60380)	8/6/2001 10:00:49 PM
From: t2	Read Replies (2) \| Respond to of 74651

Msft is too high valuation wise for me to even consider taking a buy and hold position in it, but it might be worth trading if it falls more. It's probably fully valued at 40 considering the growth rate so if that is the low on it, it's not worth holding for me. Valuations like this will only cause the stock to languish in a trading range for years. It will be like Coca Cola. A wonderful company and a stock that goes nowhere. MSFT does have a very high cash level and equity investments. Consider it unpaid dividends. In addition, they are heading into their growth cycle with XP launch; just need the economy to co-operate a little bit for them to do well. Just looking at MSFT's PE does not tell the whole story. Another point is that their cash flow growth is higher than the EPS growth. They are not booking a lot of revenue. When the unbooked revenue account starts declining in a big way, that could signal the end of the growth. PC price wars help the company as well. Decling interest rates is making MSFT a good long term hold. The dot.com bubble bursting has worked in MSFT's favor in a big way since it eliminated many competitive threats. I am also looking to buy back into it but need to see the market stabilize and the economy to show signs of turnaround.