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

To: Reginald Middleton who wrote (12891)	12/2/1998 6:50:00 PM
From: johnd	Read Replies (1) \| Respond to of 74651

Reginald, I have gone back to last 10 years (actually 12 years but let us consider the last 10 years). The average growth rate for EPS is about 46%. [Revenues over the 10 years grew at a slightly lesser pace but gross, net margins have improved.] The key question is next 10 years. Why do you expect MSFT's EPS to grow average 46% year for the next 10 years or the EPS to be $20.00 per share or about $65B to $70 Billion in profits in about 8 years from now in Year 2006? [Today 2.7 billion shares used in diluted EPS. Without factoring any splits, going forward the shares used for diluted EPS will grow to about 3.5Billion in 6 years as MSFT has been buying back less than new stock issue to employees]. To make 65 to 70 Billion in net profits, the company would require about $200 Billion in Revenues at 35% net profit margins. Reginald, explain to me why and how MSFT will have $200Billion in annual revenues in just 8 years from now? johnd