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

To: ed who wrote (13508)	12/26/1998 2:22:00 PM
From: t2	Read Replies (1) \| Respond to of 74651

Ed, I agree 100%. If we take the current PE which about 70 approx. If consider internet to be 5% and if an PE for internet business 200. Remember MSFT has both Internet access and a portal site. Weighted PE (70.95 + 200.05) is 76.5. I think a PE of 70 would be too low for this company even in their non internet business. I realize that this a crude way to determine PE but kind of signals to me that the stock is way undervalued by current standards. Remember AOL already had a burst in the internet access business. MSFT is just starting to rocket in this business along with the portal MSN.

To: ed who wrote (13508)	12/26/1998 2:51:00 PM
From: t2	Read Replies (2) \| Respond to of 74651

Jumped in Cisco last week. I had thought PE was a lot higher than it turned out be. It does not the same degree of protection from competitors as does MSFT. At this point it looks like a pretty good bet. CEO Chambers sounds pretty confident. As I have said before, MSFT is protected because of Windows and people being able to swith from one MSFT product to another without requiring full training. Furthermore, there is always a resistence to learning a new product but when its MSFT, the user already knows part of what will taught (menus and common commands). It is that familiar INTERFACE with the user that does it. This will make it the dominant company for years to come. Bet on it. Cisco is a very dominant player in its business and therefore I decided to jump in (my investment philosophy is buy the dominant companies). Started to diversify a little more.

To: ed who wrote (13508)	12/26/1998 7:05:00 PM
From: t2	Respond to of 74651

Ed, I got this from DELL thread (thanks to Mohan). Notice the reference to Microsoft and its PE in the article. To: Lee (87010 ) From: Mohan Marette Saturday, Dec 26 1998 1:23PM ET Reply # of 87024 On Window dressing (Excerpts from Bloomberg) Lee: Here is a gimmick money managers seem to use to fool their unsuspecting customers. Well,I am not complaining,window dressing or not.<g> =============================== .....Window-Dressing Computer and Internet companies are gaining as money managers who are lagging their benchmarks plow into winning stocks. This ''window-dressing'' aims to fool clients, so when they look at year-end statements they believe their money manager or mutual fund manager is in the know. Optimism that the industry's profits can keep growing even as the world economy slows is helping the stocks. And no one knows how big Internet commerce will be. One study, from a division of Ziff-Davis Inc., said online holiday sales will reach $3.5 billion this year. ''Investors believe the Internet stocks have what seem to be unlimited growth potential,'' said Marc Klee, senior vice president with American Fund Advisors, which oversees $500 million. Multiples, Incalculables Now, soaring Internet shares are changing the way some investors value companies. Amazon.com shares rise by the day even as business losses widen. In contrast, Microsoft trades at 63 times the past year's earnings -- a lofty multiple by most analysts' standards, but a multiple nonetheless. ''Microsoft has a solid product and they have real earnings,'' said Dan Eagan, a money manager at BlackRock, which oversees $115 billion. ''At that price, they're very cheap, versus a multiple you can't calculate.'' Many professionals, particularly lagging managers, are reluctant to sell their winners before the year's out. That way they can delay hefty capital gains taxes until 1999. Then, Eagan is hopeful investors' attention will shift to now out-of-favor commodity companies. He said shares such as International Paper Co. and Reynolds Metals Co. will prosper as long so the U.S. economy surprises the naysayers and continues growing.