1x Msft Discussion Threads

[mab] 20/4/2002 13:12

very impressive 10 year income and balance sheet...current PE of 50...full year
02 PE estimate of 30. probably too high for such a big company well past its growth stage. the most worrying bit is the market cap of $309 billion with current
sales of around $25 billion and profits of around £6 billion. 50% owned by financial institutions..

debt free and cash rich company.

[torturedsoul] 19/4/2002 20:33

my, my, what a fine jam job the cheerleaders did on MSFT.

a few brokers notes here and there and the decaying corpse is brought coughing and spluttering back to life.

never under estimate how crooked the big players can be in a sideways market that is near options expiry...

[energyi] 19/4/2002 08:15

MSFT Going lower, and will drag the Dow with it...
I'm surprised to see Finspreads: 10154-10164, down from 10,205.
Must be mostly MSFT

[torturedsoul] 18/4/2002 21:37

getting slaughterd now, bid below $52

[torturedsoul] 18/4/2002 21:32

if the after hours price action is anything to go by it seems that MSFT has broken the triangle mentioned previously to the downside.

currently trading at:

52.72-52.79 @ 9:31pm UK time

[stealth117] 18/4/2002 21:28

>> Goodfella

I am still waiting for the final shakeout from all this (yes its me the bubble thread man from ESI), nice to see you're still thinking.
My Sibir is cushioning me at the moment and looks like it will continue to do so.
Microsoft have just announced a big reduction in X-box prices.
Just a long term marketing ploy or is something more troubling happening ?

[energyi] 08/4/2002 18:09

FR,
Some insightful comments there. Thanks

[financialruin] 08/4/2002 18:01

The Dangers of the Microsoft Bubble

Big stocks are not bubble stocks. At least that is the common wisdom. Bubble stocks selling the latest fad might make it into the Nasdaq but they don’t make it into the DJIA top 30 stocks. However, the one big exception to this is Microsoft and this could have a serious adverse impact on the economy for many reasons.

So why has the bubble happened?

1. Media participation. Microsoft is an almost pure “bubble” company. When a “bubble” company gets as big as Microsoft it does not need to actively manipulate the media, it just becomes too big for any press or PR company of any significance to dare to go against it. Fearful of losing lucrative contacts (with suppliers to Microsoft as well as Microsoft), fearful of alienating customers, fearful of getting sued. If they value their survival the media either say nice things about Microsoft or leave them well alone.

2. The source of huge fee generation. As with Enron, the major financial centres earn huge fees from providing services to Microsoft and those companies within the Microsoft “ValuelessR21; Chain.

3. The Microsoft Monopoly. Maybe more due to accident than design, Microsoft achieved a monopoly in PC operating systems because in the early 1980s IBM achieved a monopoly in PC sales. At the time, IBM had little incentive to promote the use of PCs because low margin PC sales would have a serious adverse impact on their high margin mainframe sales. However, they knew that the emergence of the PC was inevitable and they also knew that it would be better for them to dominate the PC market rather than be slaughtered by it. They, therefore, introduced the IBM PC. Very much run of the mill. Significantly inferior to other PCs available at the time, but just about saleable. They knew it would sell because, at the time, the IBM brand was so strong. And to go with their barely saleable, run of the mill, PC they needed a barely saleable run of the mill operating system. This is where Bill Gates achieved his big break that launched him onto a non stop winning streak. The rest is, of course, history.

Why is the bubble dangerous?

1. Microsoft becomes a parasite on institutions. The problem is that pension funds and institutions have become “institutionalised”. This means they are run by rules and regulations rather than common sense. Common sense says not to buy Microsoft shares. Microsoft employees say not to buy Microsoft shares. In selling his shares, Bill Gates is giving a strong warning not to buy Microsoft. The pension funds and institutions have to buy Microsoft. Many buy shares according to their weighting in the DJIA Index. The fact that Microsoft is in this index means they have to buy Microsoft. Those pension funds and institutions that do not track the DJIA precisely will still need to have exposure to it in order to it in order to “maintain a balanced portfolio” (another dangerous “institutional” practice). No doubt the view held is that no fund manager has ever lost their job by for investing in Microsoft. By contrast, any fund manager found investing in gold could, up until very recently, have expected ridicule.

2. Inevitable lost savings and pensions. Unbeknown to most of them, millions of hard working professionals: teachers, doctors, nurses, police, civil servants, have a large part of their future pensions tied up in Microsoft and other bubble shares following the Microsoft lead. Every time Bill Gates sells another tranche of Microsoft shares, he is robbing the innocent and needy to pay for the entirely needless. Surely he has enough money already! With money and wealth and power and influence should come responsibility. Governments must take a share of the responsibility for the Microsoft bubble but, in dumping shares at the rate he is, Bill Gates is violating the trust granted to him by the public.

3. Substandard Software. Microsoft software is substandard or, at best, “run of the mill” but it has been very well marketed. We would be doing the world a favour if we let Microsoft go under. Far better software was available 20 years ago and is still available. To take full advantage of the potential of the IT revolution, the world needs far better software than that which Microsoft will ever be able to provide. Diversity and originality should be promoted rather than the continuity of a bloated monopoly that stifles healthy competition and crushes innovation.

4. Hidden Taxation. Microsoft has become another form of “hidden” taxation. We have to upgrade our software every year or so. Because we have to upgrade Microsoft Windows we also have to upgrade other software we are using. There is, of course, of little or no benefit to us because software functionality has evolved to such an extent that any further software additions add virtually nothing to our productivity. However, the true cost of using Microsoft software is far greater. On approximately an annual basis, we have to relearn how to use basic packages such as spreadsheets and word-processors and, in doing this, we have to, on a regular basis, go through a major learning curve and waste millions of man hours reconfiguring our systems to perform basis functions like printing, and weeding out bugs that are only there due to the high frequency of software upgrades. Twenty years ago I was using a perfectly good Wordprocessor that supported spell checking, mail merging, graphics, multiple fonts, a thesaurus etc etc. Today’s wordprocessors may have certain modest enhancements but such enhancements remain untouched by the vast majority of users.

5. Poor investor returns. Microsoft has never paid out a dividend and probably never will. It has negligible in the way of “real” tangible assets. In the long run it is the dividend stream of companies and its tangible assets that supports the share price. On this basis Microsoft cannot be worth any more than a tiny fraction of its current capitalisation.

6. Insider share sales. The buy to sell ratio of Microsoft shares by insiders is staggering 6.8 Million To 1. Shouldn’t this be ringing warning bells?

In my opinion, the fall of Microsoft is long overdue and, though painful in the short term, is very much necessary for the future health of our economy.

[energyi] 08/4/2002 16:42

No insiders want to buy MSFT obviously.
Doesn't look good

[financialruin] 08/4/2002 16:40

energyi,

I have calculated the ratio of Microsoft Insider Sells vs Buys.

Excluding option activity, the ratio since 17th August 2000 to date is:

Proceeds from Sells: $16,693,384,342

Cost of Buys: $2,450

This is a staggering ratio of 6,813,626:1

Could it be that there may be a reason for this discrepancy?

[energyi] 08/4/2002 16:33

LOL.
IBM has had a biggger drop, over 10%.
MSFT has someway to go to catch up. It's not impossible.
I BOT Puts on JPM today. Rogue Wave coming soon?

FR, are you going to Minesite tomorrow?

[financialruin] 08/4/2002 16:23

energyi,

Your Post 11: "THE BIG NEWS for this week: Big Drop in MSFT?"

You seem to have called this one right.

Already down $1.36 or 2.43% to $ 54.51

My advice to anyone in Microsoft, take the lead from Bill Gates and virtually all insider share traders and get out now when you still can. However, going short against the world's richest man may not be the wisest thing to do (even if it proves to be the best thing to do).

I'm going to do some analysis on the ratio of insider share sells vs buys. The figure could be staggering!

[energyi] 08/4/2002 14:13

It's all over for Big Blue, too.
Bammers Warns!
"IBM Says Quarterly Profit Slid as Much as 33% as Sales Fell; Shares Drop
International Business Machines Corp. said first-quarter earnings were 66 cents to 70 cents a share. The shares fell $7.25 to $90 in Instinet trading"

[energyi] 08/4/2002 08:58

Puts from Microsoft, perhaps?

How this works:
Gates phones his Swiss Banker (maybe UBS, which has a huge derivatives
operation in the US) and asks for some assistance in "wealth protection".
The Swiss Banker suggests he sell a "zero cost collar", pledging some
of his Microsoft stock or options as collateral. The bank, on his behalf,
sell MSFT stock short and gives him a 50-60 collar. If the price rises
above $60, then he delivers stock if and when the bank requires it.
If the stock falls below $50, then the bank pays him the difference.

Thus, it the collar runs for two years and is for 10 million shares:
At the end 2 years, MSFT is at $30, then the bank pays him:
(50-30) x 10 million: $200 million. That will keep him in chewing gum
for a long time and pay his kid's tuition at Harvard.

[hyper al] 08/4/2002 08:18

So what is "GATES, WILLIAM H. III" doing with this money, maybe he is buying into some companies he thinks will become future MSFT's

[financialruin] 08/4/2002 08:13

MSFT Insider share purchases make even more interesting reading than the insider share sales. Total insider share purchases over past two years are a staggering 35 shares!

2001-11-30 RAIKES, JEFFREY S.
Officer
20 Purchase (Non Open Market)

2001-06-16 COLE, DAVID WAYNE
Officer
15 Purchase (Non Open Market)

[financialruin] 08/4/2002 08:03

So far this year, a certain GATES, WILLIAM H. III, has dumped onto the market MSFT shares with a value of $1,168,266,000

Does he by any chance have any insider knowledge?

2002-03-01 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $58,340,000)

2002-02-25 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $59,080,000)

2002-02-11 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $61,130,000)

2002-02-07 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $59,800,000)

2002-02-06 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $60,400,000)

2002-02-05 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $61,150,000)

2002-02-04 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $61,120,000)

2002-02-01 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $62,660,000)

2002-02-01 -
2002-02-25 GATES, WILLIAM H. III
Chairman 6,991,000 Sale at $58.99 - $63.02 per share.
(Proceeds of about $426,486,000)

2002-01-25 GATES, WILLIAM H. III
Chairman 250,000 Planned Sale
(Estimated proceeds of $15,950,000)

2002-01-24 GATES, WILLIAM H. III
Chairman 1,000,000 Planned Sale
(Estimated proceeds of $64,600,000)

2002-01-24 GATES, WILLIAM H. III
Chairman 750,000 Planned Sale
(Estimated proceeds of $48,450,000)

2002-01-24 -
2002-01-25 GATES, WILLIAM H. III
Chairman 2,000,000 Sale at $64 - $65.1 per share.
(Proceeds of about $129,100,000)

See:

[goodfella] 08/4/2002 06:52

Ashley.

My target was 900 and I don't place a lot of store in Fibbonachi time estimates.

[mr ashley james] 07/4/2002 22:07

Goodfella,

Do you still see NAS at 1,000?

On Fibonacci time sequence when?

Cheers

Ashley

[goodfella] 07/4/2002 22:04

MSFT makes up about 8% of the Nasdaq movement.

If it breaks the triangle and falls to 32 bucks the falls in the Nasdaq could be spectacular.

If the falls are due to accounting worries then it could be catastrophic

[energyi] 07/4/2002 21:35

THE BIG NEWS for this week: Big Drop in MSFT?

[energyi] 07/4/2002 16:26

TS,
I think I see what you mean: a break of $55, then $53= Bad News for Bulls

[torturedsoul] 07/4/2002 16:16

On MSFT's 5yr monthly log chart there seems, to me anyway, to be a very large triangle forming over the last few years. The bottom trendline runs along the lows of Dec'00 and Sept'01. The upper trendline along the highs of Jun'01 and Jan'02.

If the pattern is going to hold there should be support kicking in not much lower than about $53 by my reckoning. And if the pattern doesn't hold it'll just make things even more interesting :-)