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

To: Sonki who wrote (12768)	11/29/1998 4:29:00 PM
From: johnd	Read Replies (2) \| Respond to of 74651

Sonki, I respect your basis for predictions. Could you please share the reasons for the 139 prediction. Also the time frame you think it will hit 139. Yes, I did load up when it went to 91 about 2 months ago. I keep in mind that the DOJ case is still not over and only 6 of 12 DOJ witnesses have taken stand. There could still be more negative news pressure on MSFT until the DOJ side of witnesses complete their testimony, Looking at the rate of progress, I would think DOJ would wrap up its 12 witnesses by Mid January. It is possible that the PE expansion may stall due short term negative news. Currently the market is acting as if there is a high chance of DOJ dropping the case. I don't think that will happen that easily. Also, the cap of 320B and 21 times sales kind of worries be a bit. Including deferred revenues, the Price to sales is about 18, still high. Forward PE basis, wall street consensu is 2.33 for FY99. At 60 PE, that would put it at 139.8. But 60 PE is on the very high end of history. During last 12 months, the PE range has been 46 - 71 with most of the time spent in the 50 - 60 band. I would plan on a 55 PE in price estimates. IF it gets only 55 PE then 128.5 (current price) already discounts the FY99 earnings. But, I also believe that MSFT's wall street esimtate of 2.33 is too low. I noted earlier that I expect 2.67. That is why I estimate 2.67 * 55 or 146.75 as fair price. But I can only make best in predicting forward EPS and have no much clue on future short term non -EPS events that determine short term PEs ratios. Anyway, let me know your reasons for 139 and let me know by when 139?