MSFT to $10?

[godoftrading]

Price hovering around long term support, to me it looks like MSFT is about to start its decline towards $10.

Thoughts?

[Justmakinmoney]

I don't think there is anything to warrant MSFT trading at 6x earnings. Right now they are at around 9x and I feel that is low. One of the analyst targets was just lowered to around ~$22 and I feel that this is on par with where they should be. My personal target is around $21. They have plenty of cash and hopefully going to stay away from yahoo.

[smartinvestor30]

They are not going to go out of business, they will suffer through the downturn though.

[Rynn]

If MSFT goes to $10, it won't be trading at 6x earnings. It's about as low as it can go right now until some more bad news comes out.

Long-term, if Windows 7 sells like Vista did, then it's possbile.

[BuyOnDips]

Price hovering around long term support, to me it looks like MSFT is about to start its decline towards $10.

Thoughts?

$10 seems very low. But they are having problems though. Most people are not bothering to upgrade their software. Many companies have avoided VISTA. I've notice the last 6 months that retailers have been actually offering MSFT Office at large discounts. You never saw that in previous years. They always held their prices firm. With PC sales falling and unemployment rising, they could have a tough 2009. I'd avoid any pc software companies for now. ADBE, ADSK, CREL, AVID and MSFT all recently either missed their quarterly numbers or warned. I expect ADBE to warn again in about 7 weeks. At best, I'd say MSFT is dead money in 2009. I guess the nice thing about shorting MSFT is you don't have to be concerned about them being bought out by anybody. :)

Ballmer should certainly be fired. Offering to buy YHOO last year for almost 50 billion bucks was incredibly stupid. It makes you think their current management is very desperate about the companies near future.

[Rynn]

Ballmer should certainly be fired. Offering to buy YHOO last year for almost 50 billion bucks was incredibly stupid. It makes you think their current management is very desperate about the companies near future.

Don't forget the $600 million search deal with Verizon, on top of them paying Verizon to use Windows Mobile, since apparently nobody wants either. They can't even give this crap away for free, they have to pay people to take it.

Any bets on how bad the next quarterly report is going to be?

[BuyOnDips]

Any bets on how bad the next quarterly report is going to be?


I didn't listen to their last call. But heard it was pretty bad. Their cash cows (OS and Office) probably won't be doing well in 2009. Companies are now truly feeling the pain of the economy. You can assume most will cut back on spending. I doubt if many companies will be buying new computers or upgrading software anytime soon. That will certainly hurt MSFT going forward. Another thing that hurts MSFT is the fact that many companies and consumers are avoiding VISTA. So they might not buy anything from MSFT until Windows 7 comes out at the end of 2009. Is this priced into MSFT current stock price? That's the decision all investors have to make for themselves.

I think another major problem for most PC software companies like Corel or Adobe or Microsoft is that their current software is good enough. You really don't need to upgrade your software as often anymore(if at all). I'm using Windows XP. It works fine. The improvements to most software upgrades is usually not worth the cost. New upgrades are just a much tougher sell.

[WiqqyNYU]

If you tried Windows 7( i am on it right now) You wont be saying MSFT to $10. There is a reason why they are letting millions of people try the beta before its official release. I think it will go up.

[Rynn]

If you tried Windows 7( i am on it right now) You wont be saying MSFT to $10. There is a reason why they are letting millions of people try the beta before its official release. I think it will go up.

Seven is getting better reviews than Vista did, that's true. But is it going to earn them any money? Right now Microsoft is giving away Windows licenses for next to nothing to any OEM that agrees not to ship Linux. How much are they going to be able to charge for Windows 7?

With computers selling for less than $500, I think the era of charging $70-100 for Windows is over. They just aren't going to see profit margins like that ever again.

I don't have any money on MSFT because I'm afraid that positive news on Windows 7 will balance out the other negative news and the stock price will end up right where it is now. But if you really think it's going to $10 within a year, you could double your money by buying puts.

[BuyOnDips]

2009 is looking bad for MSFT. New OS and Office software won't be coming out until maybe January 2010. They miss the Christmas season. That might delay lots of computer purchases until then. Those delays could hurt Dell and HP. It's getting harder and harder for pc software companies to sell upgrades of their newer versions of software. I'd avoid most pc software stocks in 2009. I think ADBE will warn again in the next few weeks. It's a tough market. Remember to do your own research.

http://biz.yahoo.com/ap/090224/microsoft_analyst_meeting.html?.v=4

[kingfisher]

2009 is looking bad for MSFT. New OS and Office software won't be coming out until maybe January 2010. They miss the Christmas season. That might delay lots of computer purchases until then. Those delays could hurt Dell and HP. It's getting harder and harder for pc software companies to sell upgrades of their newer versions of software. I'd avoid most pc software stocks in 2009. I think ADBE will warn again in the next few weeks. It's a tough market. Remember to do your own research.

http://biz.yahoo.com/ap/090224/microsoft_analyst_meeting.html?.v=4


BuyonDips

Of late, I compare MSFT with GE . Large and Slow in this market, they will survive in the long run. Good value and safe but..... enough said.

[BuyOnDips]

BuyonDips

Of late, I compare MSFT with GE . Large and Slow in this market, they will survive in the long run. Good value and safe but..... enough said.

I'd think I'd rather own MSFT than GE. GE financial services looks like a disaster. It's a plague on their company. A big, black hole. Luckily for MSFT, they didn't waste 45 billion on YHOO. They might be a $5 stock if they did that deal. One good thing is MSFT's dividend yield is getting better as their price falls. I won't look at buying any shares of MSFT until Ballmer is replaced. I have a feeling he's going to do more stupid deals in the near future. IMO, they overpaid for aQuantive and paid way too much money for that Facebook deal. They are so lucky Jerry said no to the YHOO deal.

I do like GE's Energy Infrastructure segment. That should drive some growth. I own shares of ABB, their competitor, in that space.

[kingfisher]

I'd think I'd rather own MSFT than GE. GE financial services looks like a disaster. It's a plague on their company. A big, black hole. Luckily for MSFT, they didn't waste 45 billion on YHOO. They might be a $5 stock if they did that deal. One good thing is MSFT's dividend yield is getting better as their price falls. I won't look at buying any shares of MSFT until Ballmer is replaced. I have a feeling he's going to do more stupid deals in the near future. IMO, they overpaid for aQuantive and paid way too much money for that Facebook deal. They are so lucky Jerry said no to the YHOO deal.

I do like GE's Energy Infrastructure segment. That should drive some growth. I own shares of ABB, their competitor, in that space.

At this time I would not invest in either. I do agree with your summery of GE, but MSFT is moving like a turd in a swimmimg pool. Although they have no loan program in dire streights as GE does? I still see the 2 companays on a no progress or gain in the near future?

[Rynn]

Along with that comes a report that despite aggressive price-cutting by Microsoft, Dell is selling a third of its low-cost laptops with Linux. Ballmer had better come up with another strategy, because they're obviously not going to win the price war.

http://blog.laptopmag.com/one-third-of-dell-inspiron-mini-9s-sold-run-linux

[MoreYummy]

You should rephrase it with mini laptop.

[Rynn]

You should rephrase it with mini laptop.

Well, the Inspiron Mini 9 is their lowest cost laptop. They do also offer a 12-inch 'mini'. BTW Acer and Asus report a similar percentage, so it's not just Dell.

http://www.bloomberg.com/apps/news?pid=20601204&sid=a9tyqhqbyu_s

I'm surprised that the percentage is still this high. MSFT has slashed prices and offered other incentives to OEMs to try to eliminate this, and it's obviously not working as well as they'd hoped. To avoid a competitive pricing structure, I'm guessing Linux sales would need to be less than 10%. This is going to be a very prolonged price war, which will continue to affect earnings even if the overall economy improves.

[Roger]

I had a quick look at MSFT.
P/e right now is 9 but with high book values. Considering the high brand value it is maybe justified. Estimates remain stable for the upcoming years, while MSFT had a high earnings quality for the last couple of years. Another plus is the excellent financial strength.
Regarding the question of MSFT going to 10, I dont think so. It would ean that p/e goes to 5. I think MSFT is to stable for that.

[Rynn]

Regarding the question of MSFT going to 10, I dont think so. It would ean that p/e goes to 5. I think MSFT is to stable for that.

It could happen. DELL has been trading with p/e below 6. And this is a stable company with plenty of cash.

[Rynn]

Well, Dell's earnings came out yesterday, and were low, but not too bad. It's up over 5%.

MSFT hit a new low today ($16.10). The latest money-making idea from them is to sue TomTom for patent infringement. The problem with this is that what they're suing over is basically what everyone else in the industry is doing, so unless they can settle this quickly, this is going to expand into a messy and expensive case where everyone else is suing Microsoft to have the patents overturned. Usually this kind of lawsuit is just not worth the expense, but Ballmer is obviously desperate.