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

To: Hal Rubel who wrote (8537)	6/19/1998 10:10:00 PM
From: Lee Walsh	Respond to of 74651

**** OFF TOPIC ****** But Interesting Post.... I know about a company that is 2 days away from making it to the NASDAQ small cap market.....and off the BB.....they have already met the 22 day qualifying period of over $4....but the stock dipped slightly below $4 ($3.875) this week, because of a MM short (PILL) and the NASDAQ would like see them close at or above $4 bid on Monday..(it did close at $4 Friday)....The stock is thinly traded on the BB, with a float of only about 1.5 million.....They are profitable and expanding......The COO/CFO has been talking to and lining up fund managers and brokers for the last 6 months in anticipation of making it to the NASDAQ, and they have a lot of support when they get there, but the funds cannot buy until they are off the BB.....They are very confident that the stock will be at $5 to $6 minimum, and marginable, within a week or 2 of getting on the NASDAQ.... .They are fully reporting, and just got a 3 million influx of capital to triple revenues..... I know the CEO and COO very well, I have owned the stock since September '92, purchased by a private placement. I also know some additional information, that I do not want to post publicly that will virtually guarantee your success if you buy stock on Monday. This is not one of mackers picks, but he just bought into it yesterday, because he checked it out, liked the story and the margin ability once it hits NASDAQ. PM ME FOR MORE INFORMATION Lee Walsh

To: Hal Rubel who wrote (8537)	6/20/1998 12:21:00 AM
From: ed	Read Replies (2) \| Respond to of 74651

Well, I know. The reason that Microsoft is priced at a PE of 50 is because the earning trend is sustainable, and the risk factor is low on this stock. Microsoft is in the leading position of the PC and telecommunication industry, that is why. If you compare Microsoft with Dell, you will understand why Microsoft can sustain a PE which even higher, i.e 70. In 1999, the PE will be even higher when wave of new products will be released.

To: Hal Rubel who wrote (8537)	6/20/1998 1:24:00 AM
From: Gerald Walls	Read Replies (1) \| Respond to of 74651

After all, its only a mater of time before a setback in a non-OS investment has a noticeable effect on earnings. You mean like that disaster of a non-OS mistake called Office 97? Or the other disaster, Visual Basic? Yes, MSFT and INTC have been washed up for years, according to people such as yourself.

To: Hal Rubel who wrote (8537)	6/22/1998 1:18:00 AM
From: Alan Buckley	Read Replies (1) \| Respond to of 74651

[Hal: Microsoft is the great Cult Stock of our time.] There's truth in this, and anyone who's telling themselves MSFT can't go down should sell now. It's a high risk business...but it's also a high reward business. [Hal: A significant saturation point has been reached. For the past couple years, Microsoft has not been able to fully reinvest its immense earnings into it's core business. Rather than pay enhanced dividends to stockholders, Microsoft has diversified its capital structure into more ordinary and more risky fields of endeavor.] A valid cause for concern, but is it what's happening? Most of MSFTs R&D budget this year and next will go into NT, at the heart of their core business. From virtually no presence in the huge and growing server market 4 years ago, they now have a good chance of having >50% in the near future. That market alone is big enough to maintain their current growth rate during the next couple years. Last fall MSFT weeded out many of the experimental content projects started around the Win95 ship. They're keeping Encarta, Expedia, Investor, and CarPoint, all money making concerns with bright futures. They don't get distracted easily and they're very pragmatic about what's working and what's not. Did IBM do that or did they brag about being a place where nobody ever got fired? A low return on that big pile of cash could drag their numbers down. Let's check how they're doing on the deals known to the public. Their $1B CMCSA investment is up 90% in one year...wow! The $150M in AAPL is up 33%...not bad. Are these random investments by some arrogant conglomerate that thinks "a good manager can manage anything"? (Quiz to thread: Who is quoted?) No, they are investments that strengthen and grow MSFT's influence in areas they believe are strategically important to the future of the core business. When they paid $425M for WebTV many analysts thought it was too much, but opinions I've read recently seem to be in consensus that it was a smart move. So smart, in fact, that our buddies over at the Bureau of Success Distribution (DOJ) are investigating the deal. MSFT recently sold SoftImage for roughly twice what they paid for it. Why? Because nobody says NT can't do graphics anymore. Mission accomplished. The core is strengthened with a sweet profit to boot, and since they don't want to be in a vertical market business like computer graphics services, they cut them loose. Of course, SoftImage's product line is still NT-based. Does all this sound like a fat company past it's peak that doesn't know what to invest in next? To me, it does not. [A realistic PE closer to 30x rather than the current 50X should be the case within as little as two years. That's the conventional wisdom alright, but is MSFT a conventional company? Are they really slowing down or are you just expecting them to because historically others have? Are they making the same mistakes those others did? How much is the best management in the world worth in the 21st century? Time will tell. Good luck to you, Hal. (meant sincerely)