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

To: Sir Francis Drake who wrote (21919)	5/2/1999 7:53:00 PM
From: Srini	Read Replies (1) \| Respond to of 74651

Thursday deadline for Media One deal.... bloomberg.com

To: Sir Francis Drake who wrote (21919)	5/2/1999 9:45:00 PM
From: RTev	Respond to of 74651

I don't see clearly what MSFT's interests are in this whole mess. Why would MSFT be a "loser" if AT&T grabs MediaOne? I agree. I found the factual summary in the Forbes article useful, but I too think that the conclusions it draws are doubtful. First, I think MSFT's interest in broadband are at least two-fold (and I'd love to hear more). -- MSN, e-commerce, and broadband media. This is the immediate interest. MSFT gains if they can make MSN.com the default portal on as many broadband connections as possible. Among other things, it will help them promote their media servers (and NT to run them on) instead of those made by RealNetworks or Apple. Microsoft has mentioned its e-commerce servers as a major reason for making the business-focused investments in DSL providers. -- Windows CE: Microsoft wants to see CE on settop boxes used by cable operators. They'd probably love to have it become as much a "standard" as Windows is on the computer desktop. Failing that, they want to be at least a significant participant in defining any open standards that develop for the settop box. And -- contrary to the article's conclusion that Microsoft loses if AT&T wins -- I think Microsoft could come out great even if T wins. -- MSFT could and probably will still forge agreements with AT&T even if they win the bid for UMG. -- MSFT could also end up with more influence in @home decisions if (as I think is unlikely) it merges with RoadRunner as a result of a T buyout. -- Even without any of that happening, MSFT could gain an upper hand in RoadRunner by way of secondary purchase of UMG's interest. So MSFT could still come out a winner in a number of ways even if T wins the bidding war. Microsoft hasn't ignored broadband the way AOL has. Instead, they've made those significant cable investments and have also made DSL deals that rival those made by AOL. On the sattellite front, Microsoft is not yet playing. Bill Gates made a significant personal investment in Craig McCaw's Teledesic satellite system, but the company did not invest.

To: Sir Francis Drake who wrote (21919)	5/3/1999 9:33:00 PM
From: Sir Francis Drake	Read Replies (3) \| Respond to of 74651

Hey, maybe instead of talking about Clinton, communists etc. we can concentrate on figuring out where MSFT is today, and where it is likely to go. Today MSFT broke below 80. This is significant. The next level of support is at 74. Today it went as low as 78 9/16, but recovered together with Nasdaq. Yet not all is well - this is a warning salvo. MSFT faces the trail and other factors which can put downward pressure on the price - in addition to a broad rotation in the market that seems to be quite serious. Today, the a/d line was 2:1 positive (NYSE), and represented one of the broadest advances in 40 days. The rotation out of big tech growth stocks and into secondary and even tertiary (small cap) cyclicals has gathered steam. While I think this process cannot continue much longer, Mutual Funds are certainly moving strongly in that direction. I spoke before about the market "flattening out". So, the rotation away from big cap tech growth (and big cap growth in general) will stop, but not necessarily reverse. I can well see, the p/e on the traditional highflyers getting taken down, and the multiple on various "value" plays going up, but then stabilizing at the new levels. At that point, if the market still has steam to go up, it will be a more even advance, not like before, with the big cap techs leading and no one else following. Meanwhile, MSFT is in an unhappy situation. I respect the opinion of those who say the trial means "nothing" to the shareprice. I beg to differ. I think that short term, and as long as there is a great deal of uncertainty over the ultimate fate of MSFT, the price will take a hit - if nothing else, the trial will be seen as a distracting factor for MSFT, hampering its agressivenes, its strategic planning, and tactical ability to strongly challenge competitors. Longer term is a different matter, but until then - for many, many months this will be a depressive factor. Further, the challenge to MSFT from Linnux is real. Let us not bury our heads in the sand. You cannot tell me that the fact that a strong and growing presence of Linnux as a competitor to NT in core markets MSFT is trying to enter, can be dismissed. By percentage, Linnux growth is outstripping NT by leaps and bounds. We will see what happens when Win 2K comes out, but it's stupid to dismiss Linnux. You should see what is happening abroad, where Linnux is dominating the non-desktop market in a scary way. There are significant challenges ahead. We may have seen most of MSFT's rise in share price for the year... unless there are some dramatic positive developments at the trial, or MSFT announces some dramatic new initiative that looks at conquering new markets... they need that, to sustain the kind of revenue/profit growth, that justifies a 60+ p/e in a difficult market environment that is falling out of love with extremely high p/es. I'm not a MSFT bear. Quite the contrary. Still I think this is the time to hunker down, maybe find some ways to protect your MSFT investment (buy puts, sell c. calls) - we could be in for a rough ride for some time. I hope I am wrong - I hope MSFT explodes, and if you feel I'm all wet, you are welcome to disagree and comment. But enough about communists and stuff that doesn't help.