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

To: Ex-INTCfan who wrote (4409)	12/20/1997 2:44:00 AM
From: Doug Fowler	Read Replies (2) \| Respond to of 74651

I have two of the five stocks you mentioned (INTC and CSCO) and have owned two others (MSFT and CPQ). As far as Microsoft as a stock: You have a company with a current market cap of $170B, trading at about 13 times trailing sales and in excess of a 40 P/E. You have Q3 soming soon where growth over the previous Q3 will be very tough. Next year, Microsoft will be lucky to show 25 percent earnings improvement over this year (and I think it could be less than 20 percent). You have a company that does NOT make a good partner for just about any company I can think of (except the companies they buy). You have a company which is viewed by most of the high-tech world in a very negative light. Given the right opportunity, the Compaqs and Dells of thw world will turn against Microsoft in an instant. You have Intel striking a deal with Sun to bring its OS to the new 64-bit chip. You have the NC movement (this will either be a big home run or a huge failure - I happen to think the latter - but it is still a real risk for Microsoft). You have a growing negative perception of Microsoft by the general public (I can think of few people, computer geeks and otherwise who would not love to see Microsoft fail in a big way.) On the other hand, I think Microsoft will ALWAYS dominate in operating systems and in the Office category. Question here how much more they can grow in somewhat saturated categories. I think Microsoft is a brilliant company that has executed brilliantly for many years, and may soon be the most powerful company on earth. But that power will draw the attention and scrutiny of the federal, state and foreign governments for a long time, and from that perspective alone, it will limit many things Microsoft wants to do. If we assume Microsoft will grow 20 percent a year for the next 5 to 10 years, surely in ten years it will be worth several times what it is now. But today, Microsoft looks pretty overpriced to me, given the negatives, and I think its stock either has a good ways to fall or will remain near current levels for at least the next six months. I, for one, will wait until I see how this DOJ business plays out, especially with regard to Windows 98. By the way, why did you leave Microsoft? I hear it is a great company to work for. Doug

To: Ex-INTCfan who wrote (4409)	12/24/1997 9:10:00 AM
From: Arik T.G.	Read Replies (2) \| Respond to of 74651

INTCfan, >> but IMHO, you can't go far wrong by buying and holding MSFT, INTC, CPQ, DELL, and CSCO till the year 2010. That's a bold remark. Care to explain it? IMO no one can even vaguely guess what either of these co's will show intheir reports FY2003. They're all in the rapidly changing computer industry. Anybody who would have guessed in '91 the FY '96 reports of any of said cos would have been a zillionair by now. Not many did. Not many will. Linear extrapolation is worth something in the beggining of a trend, and useless at best when the trend matures. Your thoughts? ATG