MR. Softy? anyone?

[Will]

MSFT got bashed today. anyone interested? I know Boo has a comment.

[TheChartGuru]

I will wait for the smoke to clear. Look at INTC. It has taken over a month for it to begin a small recovery

The Guru has spoken

[tekbubble]

no MSFT, no INTC until late Oct, early Nov

[BuyOnDips]

I like it. I might buy some more shares soon.

http://www.fool.com/News/mft/2006/mft06042835.htm?ref=foolwatch

[pmb1010]

I really, really thought about it.

But it was a turd at $27, it'll be a turd at $24.

[pmb1010]

I work in IT. This really sums it up very well, IMHO:
--------------------------------------------------------

Commentary: Shareholders learned lesson the hard way today

This story updates an earlier version, published before the close of U.S. markets Friday, to reflect the percentage drop in Microsoft shares based on their closing price.

SAN FRANCISCO (MarketWatch) -- Retail investors who lost money on Microsoft Corp. Friday, and those watching the carnage from a safe distance, should take an important lesson away.

That lesson is contained in a maxim that savvy professional investors already know: Stocks that lead one bull market almost never lead the next, especially when several years separate the two runs.

Before suffering their biggest drop in almost six years today, Microsoft shares (MSFT) were up 5% this year.

Granted, that's not much in a market where some upstart memory-chip makers, commodity ETFs and energy firms posted gains of 40% or more during the first quarter.

But it was SOMETHING, AT LEAST, for all the die-hard Microsoft shareholders who've watched the stock do nothing for three years, even as the Nasdaq climbed more than 60%.

Earlier this year, those who dream of the day that the company's growth will reignite and carry the stock back to its glorious highs were heartened after the financial magazine Barron's and several long-time software analysts at big Wall Street firms predicted as much. (Barron's, like MarketWatch, is owned by Dow Jones & Co.)

The theme underlying all the bullish commentary was this: Microsoft's updated version of its Windows operating system, known as Vista, combined with new releases of its server software and Office applications would prompt a buying spree among U. S. corporate customers who, by the way, are flush with cash.

Given that Windows runs 90% of the world's PCs and Office dominates the market for, well, office applications, it sounded plausible. Microsoft investors who closed their eyes could almost hear the first riffs of the Rolling Stones "Start Me Up," which heralded the marketing campaign for Windows 95 and preceded a huge run-up in the firm's profits and share price.

There's only one problem with that tune -- it's so 20th Century.

Any investor or analyst who thinks that corporate chief information officers are chomping at the bit to spend millions of dollars on Vista should pick up a copy of CIO magazine, as I occasionally do.

The buzzword these days for CIO's is ROI, as in return on investment. Full coffers notwithstanding, the people who buy IT products at large companies want to know one thing before they sign a purchase order: "When will this investment pay for itself?"

Microsoft will have difficulty answering that question because, in developed economies, the days of improving worker productivity by putting a personal computer on everyone's desk, are mostly over. Developing economies like China and India are another matter, but those markets remain relatively small for Microsoft, and the reasons why Microsoft's growth in the former will be inhibited is fodder for another column (think 'software piracy').

CIOs -- when they're not spending more on servers and storage gear to comply with new accounting and data storage requirements -- are looking at mobile applications, Internet-based software, bandwidth optimization, outsourcing IT management and consulting -- and any other software or service that lets them do more work with less people.

Microsoft co-founder and Chairman Bill Gates, who lost more money on Microsoft Friday than anyone else, knows this. That's why he has nightmares about Google Inc. (GOOG) delivering software over the Internet and has been investing heavily in new areas to come up with an answer.

But Gates is up against a huge obstacle -- the tens of thousands of Microsoft employees who owe their success to Windows and Office. Gates and Chief Executive Steve Ballmer could spend until their blue in the face on new technologies, but as long as the company gets the overwhelming majority of its revenue from those two areas, even successful pushes into new markets won't move the profit meter much.

This kind of internal inertia is one reason why bulls that become dinosaurs don't go back to being bulls. It's why companies like Microsoft and Intel Corp. (INTC) and Sun Microsystems Inc. (SUNW) are "dead money," as Frank Husic of Husic Capital Management, a San Francisco investment firm, told me earlier this month.

Others might point to Dell Inc. (DELL) or Tellabs Inc., (TLAB) two of the biggest tech gainers in the S&P 500 during the 1990s, as examples of extinct bulls.

Even Cisco Systems Inc., (CSCO) which Husic says will benefit as "an arms supplier" in the coming video broadband war between phone and cable companies, won't again see the kind of growth it posted during the 1990's tech stock boom.

"Each succeeding bull market requires new leadership," Husic said.

Tech stock leadership the last three years has been coming from Google, Apple Computer Inc. (AAPL) and other firms that sell to consumers, rather than to corporations.

While Apple's stellar three-year stock run may appear to be an exception to the rule, its shares sat out the first nine years of the 1990's bull run and came nowhere near the gains of Intel, Sun, Microsoft, Dell and Cisco in that decade.

Microsoft's chart, on the other hand, offers firm proof that the rule still holds.

[aiki14]

I may be biased against MSFT (I am an Apple user and Loyalist) but the above post by pmb1010 as well as other factors lead me to believe MSFT is scrambling to keep it together, and not advancing their business. Until a real signal that growth is occurring I would be reticent to put any bets on them. On the other hand a short position is a tad risky as well. I guess I am saying, the sidelines are the place to be on this one.

[Will]

good article, but I fail to believe that DELL and CSCO are dead, as well as MSFT. Sure they won't get to $100 dollars a share, but anyone I know who doesn't build their own computer buys an Apple or a Dell, and Apple still represents less than 10% of computer users.

Likewise, I also work in IT and personally have never seen anything but CSCO used in networking. I also don't buy the fact that INTC is dead, though I always use AMD chips in my computers.

Sure these stocks might not lead the next wave of tech explosion, but for a conservative value investor, these are all solid picks. Let's also not forget that growth stocks and value stocks tend to switch places every so often in regards to popularity and performance.

[pmb1010]

Will, good points.

But, for Cisco, how much more infrastructure can you really need?
Unless you're building a new office someplace, hubs/routers/switchs last for years. You''d be amazed what I'm running for equipment, it works, and it's not Cisco. If I was forced to switch that's what I'd go with, but when I can buy stuff on ebay for literally pennies, that's my maintenance.
(We dont do VOIP so our requirements are minimal)

We rotate thru our desktop computers about every 3 years. We buy HP/Compaq for desktops/servers, and used to be Toshiba notebooks but their quality is garbage these days so we're using IBM (Lenovo) now for the sales guys. All Intel.

Our File/Print services is Windows 2000 Server. Our clients are Win2k or WinXP depends on what came with the computer. I saw no reason to switch to Windows 2003 server. As the article stated, I saw no ROI for me on 2k3 server... Same with Office 2000. We (eventually) bought the Microsoft maintenance last year for Office software, it was cheaper than rebuying licenses for Office 2003 and/or Office2006 or whatever is next. We get "painted into a corner" and are forced to stay current, as we share files with customers. We need to be able to read the latest flavor, and Microsoft has a tendency to update their way out of prior versions working with new formats.

With these companies, I expect better performance, with similar price points. I expect to pay $1000 for a typical user computer workstation. In 3 years, it's be MS-Vista, and an Intel VR8 or whatever, and it'll still be $1000.

These are stable, solid stocks, they do have some dividends - some better than others - but as Cramer says "Paddles, Clear" - they'll be flatlined for a long time.

PS - I wonder what the mobile environment for MS promises for later this year will be the "killer app", knocking RIMM down a few pegs. THAT will give MS a boost, if it can capture new markets with that product and it catchs on.

[wheelstu]

TRaders love when stocks go down because they are going to go up. Take GM for example. Who bought at 18.5,19? Intel at 18.6 or 19 will see 22 again. Microsoft at 24 will look like a bargin in a few months. Dell is in the same boat. Good companys out of favor with investors will come back. As I also work in IT I think the bomb will be Apple when investors realize that the dual OS gimick is the rage like the IPOD. Buy low sill high.

[MoMoney4Me]

Parking funds in the likes of MSFT or INTC may pay a bit in the long run, but the days of buy and hold and old generation stocks have passed us by.
Picking momentum driven stocks in favorable sectors has become the most profitable strategy in playing today's markets.
Yesterday's theories of buy and hold and avoiding market timing just don't apply in today's markets.
That said, more money to be made at this stage of the game with the likes of NWRE or AMD, even AAPL than to take a position in MSFT or INTC and find yourself waiting years to make a dollar of those.

[MoMoney4Me]

In fairness to Will, I offer this unbiased opinion from Morningstar. Their strategy is primarily to invest in value plays and not momentum stocks. Their current opinion is contrary to my own, but I offer it here for your benefit.

Our fair value estimate for Microsoft is $34 per share. We forecast 10% average growth over the next five years, driven by our forecasts for each of Microsoft's seven business segments. While the client (Windows) and information worker (Office) segments will show only modest growth in fiscal 2006, we expect growth in both businesses to top the double digits in 2007 after the introduction of Windows Vista and Office 12. For the server and tools segment, we forecast growth to continue in the double digits with the introduction of SQL Server 2005 and as enterprises migrate to current software versions. The debut of Xbox 360--Microsoft's next-generation video game console--will drive strong growth in the home and entertainment segment for the next few years. We expect margins to dip as Microsoft spends on marketing to promote its new products, but over the long term, we think the firm can maintain operating margins above 40%.

[MoMoney4Me]

I'll place my bet for future growth on RHAT

Compared with MSFT,,mmm,there's no comparison.

http://finance.yahoo.com/q/bc?t=1y&s=MSFT&l=on&z=m&q=l&c=rhat

[Will]

are you typing this message on a linux box or is your computer running windows?
Do you planning on switching to a linux box, if not?

How about taking into account that .NET programmers are in higher demand right now than any other programming profession, as well as the fact that .NET programmers are now, on average, the highest compensated programmers.

Growth in .NET, SQL server, and other development studios, combined with growth in the handheld OS, eventual profitability in XBOX 360 sales, launch of Windows Vista and Office(which believe it or not, will be installed on most PC's 3 years from now), and presence of large cash reserves and a dividend, present MSFT as a solid choice for growth and value investors alike.

Many of us, being young investors, forget that times have been very good the last 3-4 years in the market. If and when the market turns sour, my bets will be on MSFT, and the safety and stability that it presents, rather than speculation on overvalued growth companies like RHAT and AAPL.

Sure RHAT and AAPL, and similar companies, have made investors a lot of money in recent times, but what makes you so sure that investors will always be willing to pay for the 81 P/E ratio that RHAT currently has?

[Mad Girl Investor]

will...i have to ask...is that you in your avatar? That mustache hypnotizes me everytime I see it....

[Will]

no, I'm only 24. I went backpacking in Europe this past summer, and saw this guy in Germany, so I took his picture. His wife had a Femullet.

and Yes, the infamous MustacheBeard can be very hypnotic.:)

[Mad Girl Investor]

what is a femullet? LOL

[NATHAN LLOYD]

I totally agree with you on this one Will. The market is hyped to tech companies that have crap for earnings. When a correction comes in for companies like these, Mr. Softy will make the owners feel lofty. I think the sellers have given us an oportunity to buy Mr. Softy at a good value. I'm just glad I sold it at 27 a couple weeks ago. I feel confident it will hit 30 later this year.

A couple other companies that I like right now are:

WCI - a P/E of 6.4 & a forward P/E of 5.3
- primed for a jump with a stop in fed hikes or
- when someone upgrades this due to the average P/E for companies in
this sector is 8

GEHL - fell 11% on Fri. after an earnings report that was right on.

[MoMoney4Me]

I guess it depends mostly on your goals and strategy, as with any stock you'll get differing opinions.
As a swing trade or momentum play MSFT clearly loses, but as a long-term investment, a sure winner.
As I have previously stated in posts, there is a distinct difference in investing and trading.
Several takes on how to play MSFT -------->
short term = :cry:
Regarding Microsoft - Cramer's Take - Cramer said Friday's plunge is probably justified. "There are people who would very much like to start a position, but there's no sense that the selling is over."
"Vista is a year away, the spend is very bad," Cramer said. "It leaves you with very little reason to own the stock at all."

long term = :D
http://www.thestreet.com/markets/activetraderupdate/10282485.html

[Will]

best examples of mullets I can find. Luckily, there is an example of a Femullet.

http://www.whitetrashsunday.com/WTS%20Core/WTS%20Mullet/WTS%20Mullet%20Page.htm

[NATHAN LLOYD]

I had one of those mullets. LOL WTF was I thinking?