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

To: werefrog who wrote (6062)	4/23/1998 3:18:00 PM
From: johnd	Read Replies (3) \| Respond to of 74651

July 97 repeated. MSFT long term investors probably remember this history. From March 97 to July 97 MSFT made a huge run up from around 118 to 150 and it's PE went from 47 trailing to about 63 trailing. Prior to July 97 EPS report whisper numbers went as high as 85c for Q497. MSFT came out with a 80c report. The day after the report, the stock traded down about 4% to 144 and then continued to the slide to hit a stable point around 130, where it remained for a long time. There were a couple of days when it hit 118 (once when DOJ action was imminent and another time when asia crisis caused dow to hit 6900. I see a parallel this past few days. The stock in anticipation of a significantly above mean EPS (of 48c) report, surged from a 49 PE to about 63 PE and went from about 80 during first week of March to about 99 yesterday. MSFT came out with EPS that beat only the mean estimate but not the whisper. In addition, similar to July 97, MSFT indicated slower growth and lower EPS in the following quarter (Note, in Q198 MSFT reported 72c after an 80c report in Q497). Similar to July 97, the stock is down about 4% today. If rest of history repeats, the price will keep come down by about 20% or back to about 84 by later summer. That would still be a trailing PE of 50. I am a long term holder of MSFT and haven't either bought or sold any recently. I plan to wait for it to drop to the 80s before cost averaging more. johnd