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

To: dybdahl who wrote (67385)	4/16/2002 3:52:16 AM
From: Charles Tutt	Read Replies (1) \| Respond to of 74651

Actually, I think the main problem for Microsoft is that the price of its software needs to come down as has the price of hardware. As hardware prices have declined, and software prices have stayed firm, the proportion of the cost of a new system accounted for by software has shifted until software dominates. In order to support the valuation of its stock (and its excessive price/sales ratio), Microsoft needs that to continue, but alternatives are becoming available that allow a more balanced combination of hardware and software cost. Eventually it will become impossible to resist, and price cutting will follow. Thus, they really NEED other, large sources of income (e.g. XBox, MSN, etc.) but haven't had much success developing them. "Financial engineering" has filled in the gap, but can't continue forever. JMHO, of course. Charles Tutt (SM)