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

To: Sir Francis Drake who wrote (22760)	5/16/1999 8:25:00 PM
From: t2	Respond to of 74651

SFD and JFD, Good points from both sides of this argument. I think MSFT will continue on a roll, growing at a faster than advertised rate. They have been surprising everyone so far and I don't expect that to change. I still believe a lot of the reasoning for the unearned revenue account was related to trying to "slow down" revenue and EPS growth. Everyone remembers all the analyst saying Windows98 is not much of an upgrade and most people won't bother buying it. It surprised everyone just like Office2k will. I have already read Office2k will be no big deal. I believe the software market has not matured yet----IT NEVER WILL. MSFT will continue developing newer products and improve existing ones (Office 2003?). Once you set the standards, the corporate world cannot abandon you for a different brand due to training requirements (and to bring in trained personnel is more difficult). The corporate world is getting too competitive to waste money by switching to different applications that more or less accomplish the same tasks. Once you have a saturated market----the upgrades are going to bring in a ton of cash in order to sustain the revenue. MSFT now has the trust of the corporate world for low cost solutions. I believe if there are two competitive products, MSFT's will be chosen by the busines world. For example, those that had picked Lotus123 or WordPerfect a few years back---ended up switching to Office sooner or later. This is what will happen with any software that MSFT focusses on. IMHO the corporate may not want to take a chance on another company's software even if it is better. If there is new innovation (just like the browser), MSFT will be reacting much faster than they did last time. I think the lesson has been learned. Then the marketing department will take over along with big investments in R and D for the new software. Then there is the consumer market.......

To: Sir Francis Drake who wrote (22760)	5/16/1999 10:11:00 PM
From: John F. Dowd	Read Replies (1) \| Respond to of 74651

SFD: Since you were so kind to respond I can't help but to do likewise: 1. Can't see where MSFT isn't actually way ahead in the internet. You must be overlooking Expedia,CarPoint,IE5.0,and I am sure Win2K will be very well suited to the net . Then we have things like Back Office which will lend themselves very well in application on the net. No one is going to leave MSFT for some non commercial Unix knock -off O/S developed in Finland that doesn't have the depth of NT and its corresponding apps and installed base. Add to that their strategic positioning in the big pipes around the world and they are way ahead. They will gain share at the expense of ORCL and others in the enterprise field. 2. If they slow it will be momentary and when the impact of Office and Win2k is felt there will be a quantum leap. 3. They are spending it fast? They are $ turning it into securities which have made them paper profits already. The T paper pays a 5% dividend and if I am not mistaken corp to corp dividends are tax exempt. This is 250,000,000 of chump change plus a call on T at 75 (you could do worse). Additionally this spending is not being done in a vacuum: 1. It has the a purpose see item 1. 2. They are a fiscally conservative lot and if you agree that they have excellent mgmt. they are not doing this without anticipating a large cash inflow as they see Win2k/Office2k turning around and opening flood gates of cash inflow. 4. There cash will continue to grow and remember when testing quick ratios we use cash and marketable securities. There use of cash transformed to securities has put there cash to work while maintaining liquidity. 5. Their problems? I don't think so. They see that they have to change and for their size they are turning as fast as an aircraft carrier can and when they get into the winfd they will be ready to launch. 6. Perhaps too liquid for day traders but great currency in trades if cash is not to the liking of the aquiree. Stock is a great currency in a complete takeover whereas cash is good for the investment type of deal ala T and others of late. Their weakness in this area might be the enormous number of employee options floating around. 7. Tongue in cheek to a point. But when you consider this article:US suit against American flies into rare legal area By David Lawsky WASHINGTON, May 16 (Reuters) - The Justice Department has taken off into rarely traveled legal territory by bringing a predatory pricing lawsuit against American Airlines -- the first such government action in decades. The complaint filed last week accusing the airline of illegally pushing smaller rivals out of Dallas-Fort Worth Airport was praised by the father of airline deregulation but antitrust experts warned such cases were hard to prove. "I think it's probably the most important policy development of the 20 years since deregulation," said Alfred Kahn, economics professor emeritus at Cornell University and the man who oversaw deregulation as chairman of the Civil Aeronautics Board. "The essential premise of deregulation is that competition will protect the public," said Kahn. "And an essential premise for competition, in my opinion, is that you have an antitrust policy." The above puts this DOJ's whole mo into perspective. The outcome of the suit will be a whimper and not a bang. Sorry Toy. 8. Gross margins in th area of 97%. They could trend higher if certain expenses such as R&D were given a rest as they enter a different milieu- although I doubt it. CE will not require the same expenses as Win2KNT. 9. Gates ownership is not that important as he is in this for the sheer joy and pride of the thing. The senior and middle guys have great wealth riding on the performance of MSFT-this is good and it evidently has worked so far. The mountain you speak of is only worth something if the company prospers and will be unleashed in a measured manner. 10. Perseverance,perseverance-Read what Coolidge said. Yes therre is a certain amount of what you refer to as bullheadedness but this is a stand on principal and further highlights the integrity of this company. They will not make a deal at the expense of immasculating the company and ceding its right to innovate or selling off its crown jewels. I really admire this dweeb called Gates. He is crafty and dogged and I can't think of a better guy to place my $ with. Goodnight, JFD