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Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator -- Ignore unavailable to you. Want to Upgrade?

To: John F. Dowd who wrote (14776)	12/12/1997 8:47:00 AM
From: Reginald Middleton	Read Replies (1) \| Respond to of 24154

To begin with, The guys with the money do not value companies like MSFT on a captialized earnigns basis (see rcmfinancial.com ), that terminology and mind set is relegated to the sell side industry and those that they attempt to market to. As for MSFT's prospects, that is getting to be a complicated story. Let me put it this way, do not be surprised if there are surprises. That being said, MSFT has never missed a quarter (the reason - see the link above). With a compounded annual growth rate of about 35-45%, MSFT has performed spectacularly, and captured 90% of the PC market. The oppurtunity is that they only have 90% of a nascent, hypergrowth market. PC penetration in the household is 33% in the States, considerably lower internationally. The penetration growth rate is about 22%, and the technology is coming about to quadruple this growth rate via access to the household through the ubiquitous TV, via WebTV, cable modems, DSL, etc. With this penetration potential (stateside and internationally), the contiguous markets and revenues now become available (on demand reference, on demand entertainment, banking and financial services, travel realted services, fee income, transaction related income, new media, the list is extensive). These new revenues would have previously been seen as that of a lower profit potential than that of traditional software. As one who has built a large webisite and specialized new media products, I can tell you that margins are VERY high with these new electronic, intellectual property products. Then we have the evergrowing enterprise market, of which MSFT is a nascent player. This is a growth market, of which MSFT has broken into and successfully penetrated. Less than five years after thier first foray, they have actually threatened (seriously) some of the industries most established players (SUN, ORCL, IBM, LOTUS). As a matter of fact, all of the major players except SUNW, have aggresively adopted the MSFT standard which did not even exist 5 or 6 years ago. That is what I consider growth, and they are just at the beginning of the produst life cycle. The enterprise market has lower volume, thus higher margins. MSFT is using the Wintel business model to bring the commodity methodology to the enterprise that they successfully wielded on the desktop. They have done this without sacrificing signifant marging by selling in volume and minimizing fized and variable costs. Just $.02, I recently visited Internet World at the Javitz Center and feel all techincal :-) Copyright 1997 RCM Financial Group LLC rcmfinancial.com