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

To: Dennis Doubleday who wrote (62485)	11/1/2001 6:06:44 PM
From: David Howe	Respond to of 74651

<< If markets continue to erode >> This could always happen, don't disagree with you there. However, I have a fairly decent feel for what's on the books at MSFT as "investments", and, there isn't much room for future losses, even if the Nasdaq dives another 50%, IMO. Maybe one more quarter of negative investment results, but beyond that, they'll be positive (until the next bubble bursts). There isn't much left on these books that is at high risk. There's plenty that gives consistent returns (ie. bonds). The following numbers are totally fabricated, but intended to serve as an example of my points above. You have $1 million in bonds You have $1 million in telcom investments Over a 2 year period bonds go up by a total of 11%. Over a 2 year period telcom goes down by 80%. Now you have $1.11 million in bonds. Now you have $0.20 million in telcom investments. You just reported an investment loss of $0.69 million. Over the next two years the bonds go up by 11%. Over the next two years telcom falls ANOTHER 50%. Now you have $1.23 million in bonds. Now you have $0.10 in telcom investments. You just reported an investment gain of $0.02 million. That's assuming that telcom (example of equity investment MSFT has held and claimed responsible for their losses) falls another 50%. And, it assumes that MSFT at the peak of the bubble had an equal weighting of bonds and equities in their portfolio. I think these are conservative assumptions and feel that MSFT doesn't have much downside risk at this time in terms of their total investment portfolio. IMO, Dave