Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Brian Malloy who wrote (14460)	1/18/1999 11:36:00 AM
From: johnd	Read Replies (1) \| Respond to of 74651

Excessive exuberence at its peak is what I see right now. During the last 12 months microsoft has gone up 75 points while the company will report an increase in trailing eps by about 60c. That is a whopping 125 PE on that 60c. All fundamental ratios of Price to Sales, Price to Earnings, PRice to book, Price to cash are at its peak. What if we get a correction. At times of exuberence I worry about "How low can it go?" and not how high can it fly? Tomorrow Microsoft will report 4.5B in revenue, 65c in EPS. The problem is the March quarter. Both Office 2000 and NT5 are not going to contribute to revenue for another 6 months. SQL and win98 will help sustain a bit. But there will be slowed revenues growth due waiting for new office and NT releases. I see serious danger in forward price movement. When multiples get very very rich and when valuations are out of this sky, then one has to worry about "what if the crowd is wrong?" We have to keep in mind that Microsoft has its own mind. The big problem is, at these valuations microsoft is hurting for the longer term because it cannot. (a) Buyback shares (b) Issue put warrants at good premiums (c) Offer employees stock options at attractive prices. So who will get hurt in the long term, us long term holders, along with microsoft. johnd