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

To: 16yearcycle who wrote (14510)	1/18/1999 6:22:00 PM
From: johnd	Read Replies (5) \| Respond to of 74651

Eugene, I rememebr the 1/97 announcement. The times were different, back then microsoft was coming out of series of flat EPS announcment. It looked like .44, .44, .44, .47 and then it lifted the stock with the office 97 ramp with a .65 that was a major surprise. Back then valuations were far more modest. PE was around 40 - 50ish. The stock closed the year around 90 or so and then office 97 took it to overavalued situation in summer of 97 to 152. Then during the next six months MSFT went down from 152 to 120 and closed at 129 by year end. I was there to exprience it. I do espect a strong quarter but growth rates are slowing with 25% refenues growth. It was evident last Q. When revenues grew only 25% and deferred recvenues grew at lower rate than before. Last Q, msft did a lot of cost containment to attain .56 eps as it needed it to avoid too much of a depreciation in stock price. The 41% PC unit growth helps Microsoft. But I also believe their average OEM price has come down as low cost PCs larger % OS costs otherwise. Also keep in mind the recent DOJ and public expsoure to OS pricing. In addition the Dollar to Yen helped. Pretty much all the world except US is suffering: Japan, Lat.AM, Asia, Russia,... There is so much exuberance here, I expect Greg Moeffi to bring sanity to the valuations. Then on Wednesday we have Mr. Greenspan who could bring sanity to overall market with the internet mania in the works. All said the danger of going to 120 - 130 should not be ignored. I am incredibly worried about March quarter as well as June quarter. For long term holders it doesn't matter as at year end MSFT should be back unless the S&P PE corrects towards historical average of 14 (that is 50% drop on S&P). The problem is the wall street types dump a stock unless they see strong gains in the next month ro next three months. I am worried about following right now (a) Internt mania ending in a spectcular crash for all (b) Interest rates edging up (c) Inernational crisis (Brazil, Russia, Japan, Asia) (d) Y2K (e) DOJ: Can't rule this one out. The Jury is still out. There are just too many lawsuits against msft It is difficult to state and recognize these concerns at times of euphoria and excessive exuberance as it is an unpopular thought. Also most humans like to hear only the most optimistic opinions. that is exhilerating. See what happened to INTC, AAPL, YHOO after coming out with stronger than expected earnings. All fell about 10%. YHOO fell 25%. It is our hard earned money, let us not loose it. Capital preservation is equally importnant or more importnant than capital appreciation through speculation. Thanks for listening. johnd