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

To: Ed Schultz who wrote (4586)	1/2/1998 5:26:00 PM
From: johnd	Respond to of 74651

Folks: I expect the US markets (Dow Jones, S&P) to slow down this year even with low interest rate environments. The overall market cannot sustain 26%, 33%, 21% type growth rates. The stocks overall won't fall much, thanks to low interest rates. If you sell equities, where do you put that money? (If not in bonds). So I think the stocks will hold for some 5% - 10% type of gains in the voerall market. But MSFT will significantly outperform the overall market. - Starting this year, MSFT will have to start reporting all the defered revenues and corresponding profits - Staritng this year MSFT has to report earnings both fully diluted and without (considering option execrcises and withtout.) - Backoffice with NT4.0, 5.0 will beat today's estimates - MSFT will pick a significant chunk of e-commerce revenues. Having said this, MSFT is on it's way to earn $3.15 in CY97 My projection is that MSFT will earn 27% more in CY98 or $4.00. I can't tell what PE MSFT will trade at 1 year from now. But depending on a range of PE from 35 - 60, the stocks can be anywhere from 140 - 240. I will pick the mid point of PE at 47 and stock at 190 for this stock to be trading at 1 year from now.

To: Ed Schultz who wrote (4586)	1/2/1998 6:58:00 PM
From: Bill Fischofer	Read Replies (1) \| Respond to of 74651

Re: Market Caps I agree that $400 in 3 years may be a tad aggressive but to argue that MSFT cannot get there because its market cap would be "too large" is missing the point. MSFT will be worth much more than that by 2010. While the notion of a company commanding a trillion dollar market cap may seem outrageous today, remember that market caps of 10, 50, and 100 billion dollars were seemingly "impossible" not so long ago. The 21st century global information ecomonmy will be tens of trillions of dollars per annum in size. Companies supplying the critical infrastructure of that economy such as MSFT, INTC, CSCO, CPQ, and EMC will be very handsomely rewarded. That's why I consider them core holdings.

To: Ed Schultz who wrote (4586)	1/2/1998 10:24:00 PM
From: X-Ray Man	Read Replies (2) \| Respond to of 74651

1. Agree 2. Agree 3. Agree Very much my reasoning too. I don't think that I said MSFT has reached its peak. HP is already backpedalling somewhat on NT, because alot of their customer base won't abandon UNIX. Let's see what IBM says at MacWorld Tuesday. IBM tries to play all directions at the same time. Their dropping $$$ support for NT on PPC I read as a negative. KPMG is stuck fast on MSFT tits. Exactly, THE question is what share MSFT will get. Will they get the same 90% share in other markets that they have on the desktop OS that got them to where they are today? To that, I say not likely, because alot of other companies know what is at stake this time around. I did not say there will be a reduction in investment rate. I just think the market will move out of favor to the current degree as preferred instrument. Currently, it is the pre-retirement boomers that are driving this, mostly via mutual funds. As the boomers now enter their mid-fifties, the mix may go from nearly all stocks to other instruments, especially as volatility is now teaching the lesson that the arrow isn't always up. I expect more investment in bonds and real estate than the past few years. Asian difficulties will "blow over", but it will take a few years before profit centers for sales to growing asain markets start to drive earnings across the board again. Plus, there will be an election year coming up, with lame duck admin, likely not to help the market either. Also I expect Greenspan to retire during this period. Another way to look at it is that I see a whole range of combination of different events and conditions made the MSFT and general market runup possible the last few years, and that the same conditions will not likely continue. And I also think that MSFT may not undergo the necessary transformation from a high-tech company to a media conglomerate necessary for it to wisely invest and use that market capitalization and cash. It will require a very different corporation to do that, something that few seem to recognize. Well, that's all. Back to watching my AAPL options, making some quick $$$ on the normal pre-MacWorld runup...