Johnd,
If you took my advise and bought back your Microsoft shares whent it hit $139 before the new year, then please accept my congradualation, otherwise , it is too bad.
If this e-commerce stuff announced today is for real, then I expect Microsoft had another split sometimes in Nov of 1999 after the comming announced split of Jan.
The bigger the cap the more shares split will only benefit Microsoft, the reason is
after the split the burden of employee stock option to Microsoft will be reduced significantly. Thinking about that 1000 shares of stock option before the split may count 1/20000 percentage of the total outstanding, after a 2 : 1 split , the new 1000 shares only count 1 / 40000, so Microsoft's liability to the employee stock option is reduced significantly.
The following prediction of Microsoft's stock price is based on the assumption that today's e-commerce announcement is for real, Office 2000 released in the middle of this year, Win2000 release sometimes in the second or third quarter, and PC shipment continues to grow fiercely, and Microsoft's revenue and profit, as a result, will increase to its historical max extend, I predict by end of Jan, 1999, Microsoft will announce a 2 : 1 split, and stock price hit $165 ( we are about 13% away).
By end of April , after the earning announcement , the stock price of Microsoft will
hit $110+ after 2: split adjustment. By July of 1999 after the earning announcement,
Microsoft will hit 140+, and by end of Oct 1999 after the earning release, Microsoft
will hit $160+ ( from June July to Oct is a traditional slow quarter for Microsoft stock, maybe due to the summer vacation in Europe), We may see another split by the end of 1999.
I have gone through the bear in 1987, and have the bitter taste that stock drop 20% in one day in 1987, however for the 70s bear market , I am still too young to know the stock market at that time. However, this time is little different. Technically , we
have gone through a bear market from Oct of 1997 to Oct of 1998, but the recovery is pretty fast. During this bear, Asian market is in big S**T*, Russian is on the edge of meltdown, South America is also in big trouble, and Japan is tight up with its domestic financial problems. Now, All these areas are in a recovery, and things will only be better as times go by. Just last week , I read a pcs of news that S. Korea is now under a quick recovery.
In 1999, things will only be better, since we have gone through the worst and most dangerous period in 1997 and 1998, how worse things can go ?
Due to the e-commerce, people on the other side of the atlantic or pacific ocean can
easily order merchandise from a US company through the internet, we have come to a new commercial age, we will see more and more business activities on the net in the years to come. That is the reason why you can not use the traditional logic to judge the stock market of new age anymore. That is why I said that if today's announcement of Microsoft about the e-commerce is for real, we will see a big boom
on the stock price in 1999 2000 and the years to come , the impact is just too severe.
That means everyone can set up his own web site easily , can you imagine how large the sales will be ? The impact will be more than the invention of Window OS.
In the past two days , we see very apparently that big money is flowing into Microsoft. The kings of 1998 are AOL, Yahoo and DELL , and all went through two split cycle in one year, but people finally realize that AOL, Yahoo are just temporary phenomina in the e-commerce arena , since the entry barrier is too low, and DELL can't sustain its high growth, since the competition of hardware business is fierce.
People will finally realize that the final winner in e-commerce will be Microsoft, because it has the technology, the deep pocket , and the market , and which can be sustainable. |
