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

To: Scott Overholser who wrote (23294)	5/26/1999 6:13:00 PM
From: johnd	Read Replies (1) \| Respond to of 74651

One can never say "Never". It is the stock market. But 35 PE is unlikely considering the huge unearned revenue and now being a much bigger gorilla than 3 years ago.

To: Scott Overholser who wrote (23294)	5/26/1999 6:52:00 PM
From: Deliveryman	Respond to of 74651

>>msft traded at 35 times trailing earnings in 1995 as the large-cap bull market began. why wouldn't it get there again (e.g. trade flat for many quarters.)<< Well for one thing the world is very different now, than 1995. It is interesting math to divide the P/E of all the DOW stocks, S&P 500 stocks in half. You probably end up with a DOW 4000 or there abouts. If that happens, well MSFT share price will be the least of MY worries. You need to consider the economy, and the role computers play. Also the enormous MSFT position in most mutual funds.

To: Scott Overholser who wrote (23294)	5/26/1999 6:55:00 PM
From: freeus	Respond to of 74651

For all of your information Janus 20 has revised their top (Aol and Dell were 1 and 2 with 16% and 11% respectively at the end of the year, before that DELL was number one with 15%) As of March 31, 1999 #1 AOL 16.16% #2 MSFT 6.12% #3 DELL 5.51% #4 Nokia 5.47% #5 Time Warner 5.19% #6 Csco 5% Freeus

To: Scott Overholser who wrote (23294)	5/26/1999 8:05:00 PM
From: t2	Respond to of 74651

I believe MSFT started their unearned revenue accounting in a big way in the last 2 to 3 years. That reduced EPS, which in turn reduces the increases the current PE. I have not done the math but if you were to include the increase in the unearned revenue account for the last 4 quarters, you would get a somewhat lower PE. If i have some time, i will do the calculations and post them. One can always argue that there is an accounting reason for the deferal but I simply see it as a tactic to keep margin as close to industry levels as possible(it hasn't worked). It allows the company to grant stock options to employees having reasonable assurance that those options will be worth something. In addition, their equity put warrants selling strategy keeps working=bonus cash. MSFT is betting(and planning) a steadily increasing stock price for the next few years. It is much better than to have 400% gains one year and nothing for 2nd, 3rd, 4th years.

To: Scott Overholser who wrote (23294)	5/27/1999 1:54:00 AM
From: ed	Read Replies (1) \| Respond to of 74651

It is the big market which decides how high is high or how low is low about PE, If the big market is moving, Microsoft will not be excluded. Relative to similar companies in the market and its business model, MSFT's PE is low in this market . But in 1995 , even PE of 35 is too high in that market. In 1995, Microsoft just release win95, the big money printer, but in 1999, Microsoft will release Office 2k and Win2k + the e-commerce, so , PE in today's market is just too low for MSFT.