tag:blogger.com,1999:blog-2316765421340036602.post1329807145518228213..comments2024-01-10T11:38:15.547-08:00Comments on Random Observations: The stock market thinks Microsoft has just under 4 years leftBen Tillyhttp://www.blogger.com/profile/04335648152419715383noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-2316765421340036602.post-25836382580272291262014-12-17T03:00:33.289-08:002014-12-17T03:00:33.289-08:00Microsoft, what should we expect and predict. How ...Microsoft, what should we expect and predict. How will <a href="http://www.bidnessetc.com/company/msft/" rel="nofollow">MSFT</a> perform in the upcoming time.Anonymoushttps://www.blogger.com/profile/12887336402150640913noreply@blogger.comtag:blogger.com,1999:blog-2316765421340036602.post-74768373279694106332010-12-28T23:00:43.933-08:002010-12-28T23:00:43.933-08:00That's really awesome.. I hope I can see more ...That's really awesome.. I hope I can see more of this.. I am looking forward for your next post..<br /><br /><a href="http://www.ninjapennystocks.com/" rel="nofollow"><b>Penny Stocks</b></a>JohnMathewhttps://www.blogger.com/profile/08230760574663548135noreply@blogger.comtag:blogger.com,1999:blog-2316765421340036602.post-60239517818599267252010-06-21T18:24:14.945-07:002010-06-21T18:24:14.945-07:00Why do the all the ads on your blog seem to be Pub...Why do the all the ads on your blog seem to be Public Service Announcements? Did you choose this somehow in AdSense? Or are Google employees only allowed to have PSAs? It just seems very strange to me. Nice writing on your blog by the way.Maintenance Manhttps://www.blogger.com/profile/11251164494419993264noreply@blogger.comtag:blogger.com,1999:blog-2316765421340036602.post-49975494690589014342010-06-09T13:17:42.482-07:002010-06-09T13:17:42.482-07:00There are all sorts of problems here, but the one ...There are all sorts of problems here, but the one most worth pointing out is in reference to Mr. Sokol's comment. The market does not reward extra risk with extra valuation. Rather, it is exactly the opposite of that. Classical valuation theory has plenty of wholes in it, but for the most part investors really do demand compensation for assuming additional risk. Demand for compensation = lower current valuation = higher potential return.<br /><br />Investors do pay for growth potential, and companies with the potential for high growth do tend to be the same companies that are taking risks in their markets, but the risk does not cause the valuation. If a company somehow manages a low-risk strategy for high growth, they are likely to receive a higher valuation than a company with a high-risk method of growth.<br /><br />As a side note, I suggest that Microsoft's entire business model is anything but stable at the moment.Unknownhttps://www.blogger.com/profile/13239874640573237039noreply@blogger.comtag:blogger.com,1999:blog-2316765421340036602.post-6175592002902745342010-06-09T09:43:37.533-07:002010-06-09T09:43:37.533-07:00Your description of book value is wrong:
- Book ...Your description of book value is wrong: <br /><br />- Book value is what all of the company assets would be worth if it was broken up and sold today<br /><br />That would be the market value of the company's assets. The book value is the value reflected on the balance sheet.<br /><br />The difference between book value and market capitalization cannot be simply explained by 'projection of future earnings'. It depends on many components such as business risks, financial risks, company's cost of capital, goodwill etc.DMhttps://www.blogger.com/profile/09927756795819100530noreply@blogger.comtag:blogger.com,1999:blog-2316765421340036602.post-89204499598089341962010-06-09T09:36:55.748-07:002010-06-09T09:36:55.748-07:00You're confusing gross profit with net income....You're confusing gross profit with net income. Gross profit doesn't take into account things like R&D costs. It simply calculates how much stuff cost to make and the price at which that stuff sold. You don't just add gross profit to market cap at the end of the year. There are other costs involved.<br /><br />The stock market doesn't believe that MSFT is falling off a cliff in 4 years. It believes that MSFT is an established business that is unlikely to grow at the same rate as AAPL or GOOG over the next few years. <br /><br />A P/E of 13 is fairly normal for an established company. It is comparable to companies like AT&T or Berkshire Hathaway. Nobody thinks AT&T is disappearing in 4 years. At the same time, internet search and online music sales are much higher growth industries over the next few years than desktop operating systems and office productivity suites.Unknownhttps://www.blogger.com/profile/17045092924162128430noreply@blogger.comtag:blogger.com,1999:blog-2316765421340036602.post-69774705615297783122010-06-09T09:34:55.194-07:002010-06-09T09:34:55.194-07:00Are your sure the numbers add up for GOOG? I got i...Are your sure the numbers add up for GOOG? I got it to 8 years.Johnny Doughhttps://www.blogger.com/profile/12914981852434267895noreply@blogger.comtag:blogger.com,1999:blog-2316765421340036602.post-21171496512098348302010-06-09T08:52:41.823-07:002010-06-09T08:52:41.823-07:00Doesn't this completely ignore the valuation o...Doesn't this completely ignore the valuation of risk? Microsoft's business is stable, whereas AAPL and GOOG are constantly moving and unknown. They are projected to _increase_ their profits, and the valuation is coming from the their book value, future potential profits, and the risk of not actually knowing. Microsoft has been serving their core business for quite some time and they aren't going to be shaking things up as much as google or apple.<br /><br />And the market is usually right, unless technology is involved. (See also: dot com bust)Unknownhttps://www.blogger.com/profile/12370466428161009978noreply@blogger.com