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Microsoft Corporation Message Board

  • cdanajackson cdanajackson Jan 16, 2007 3:15 PM Flag

    My valuation of Microsoft's stock

    Hi,

    I did a Free Cash Flow to Equity Discounted Cash Flow model on Microsoft's stock, and I came up with an intrinsic value of $29.14. So, at this point, the stock is fairly valued and not worth purchasing.

    However, if you own the stock, I say continue to hold it, as you're at least benefiting from the small dividend yield and the company's other great financial numbers.

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    • "enough to buy a new box sooner than they otherwise would have? "

      yes, I believe so.

    • dynamite_as_wrathful_pig dynamite_as_wrathful_pig Jan 28, 2007 1:59 PM Flag

      >>>Then how exactly did the revenue spike occur with Windows XP and every other verison of Windows? If one revenue stream was just replacing the other and no one really bought any more units?<<<

      because there was a need at the time, and hence more units were bought. that was then, this is now.

      tell ya what. i'm just gonna talk with the brighter people here - you haven't made a cogent point in this whole thread.

      feel free to go back to cheerleading.

    • dynamite_as_wrathful_pig dynamite_as_wrathful_pig Jan 28, 2007 1:44 PM Flag

      >>>ah, but many including myself believe that vista will reignite excitement and incrementally more pc sales. so, your argument, predicated on status quo, has a weak spot. also, vista costs more, from what I have heard. so,m that will probably give revenue a boost too. plus, a hot new version will incent volume deal renewals, which is also a big source of revenue for ms.<<<

      there will be some of that. but you know what? from what i can see, most people that aren't in the biz or avid computer users don't even know msft is coming out with a new version. hell, i'd bet a high percentage of users couldn't tell you the version they're running is called xp. those users don't care, and there are a *lot* of 'em. as for bumping prices - that tends to have other effects as well. simply multiplying the current rate of sold copies by a price increase doesn't yield a number for an expected revenue increase. any economics student can tell you that. raise the price, and you affect the curtomer's buying decision.

      >>>so, all in all, the argument that vista will put ms through the roof in the near term is flawed, as is your standard basher refrain that it won't mean much of anything. as usual, the reality probably exists some where in between.<<<

      ah, but that's exactly what i'm saying. we probably agree more than disagree on that.

      >>>put down the abm script and give it a good open-minded workout and then report back on whether you think the new features, security level, and eye candy will make people want it. i think when they see it, they will. it is extremely cool to look at and fun to use.<<<

      enough to buy a new box sooner than they otherwise would have? my guess is - some. not most. and as they find out that vista is still windows - see the washington post piece in another thread here, that'll seal the deal for the majority. the days of a new version of an os shooting computer sales thru the roof are in a previous century at this point, imo.

    • <ah, but many including myself believe that vista will reignite excitement and incrementally more pc sales. so, your argument, predicated on status quo, has a weak spot...>

      What all you "there's going to be great ne excitement and new sales" proponents forget is that 28+ analysts who follow Microsoft can see what will likely be too, as can Microsoft and that is priced into the projections and shares today.

      Extraordinary adoption and you may get a revision upward, problems and it could go the other way.

      This stock is already priced as if it's growing at 15% per year (and will continue at that pace).

      Instead, as of today the real earnings growth from the business is less than 5%.

      The point there is: there *better* be an earnings spike or you are Waaaaaaaaay ahead of yourself price-wise.

    • ah, but many including myself believe that vista will reignite excitement and incrementally more pc sales. so, your argument, predicated on status quo, has a weak spot. also, vista costs more, from what I have heard. so,m that will probably give revenue a boost too. plus, a hot new version will incent volume deal renewals, which is also a big source of revenue for ms.

      so, all in all, the argument that vista will put ms through the roof in the near term is flawed, as is your standard basher refrain that it won't mean much of anything. as usual, the reality probably exists some where in between.

      I like using my pc way more with vista - it is not the "nothing" you dismiss it as with no hands-on experience whatsoever (as you have proudly admitted).


      put down the abm script and give it a good open-minded workout and then report back on whether you think the new features, security level, and eye candy will make people want it. i think when they see it, they will. it is extremely cool to look at and fun to use.

    • dynamite_as_wrathful_pig dynamite_as_wrathful_pig Jan 28, 2007 1:26 PM Flag

      >>>If this happens then Vista will cause a huge revenue spike. People and/or cooperations won't have to run out and buy Vista tomorrow. The makers of the PCs are already doing that.<<<

      the oem folks are buying xp now. they'll be buying vista *instead* soon. i'll type this r-e-a-l s-l-o-w-l-y for you so you can follow it: one revenue stream replaces the other.

      >>>You've yet to show, how things are currently different that the hardware makers aren't going to upgrade to Windows.<<<
      >>>Saying that most computers will be upgraded to Vista yet, its not going to help Microsoft's earnings is really moronic.<<<

      you keep claiming i said things that i didn't say like the two things above, then you try to argue with those. try to stay with the conversation.

      >>>You fail to understand the economics of the business. Windows is not like a car that you go out and buy. Its the engine. If a new engine came on the market, no one would rush out and buy a new car. But you can bet that every car manufacturer would install the new engine. Windows makes most of its money from the hardware makers, not the end user.<<<

      cut your b.s. - i understand the economics of the business just fine.

      for the engine maker to increase revenues, either they have to up the price relative to the previous engine model or the car makers have to sell more cars. if nobody's running out to buy a car because it has a new engine this year as you said above, you're just supporting my point.

      from an oem pov, vista replaces xp. there ain't no spike there unless pc sales go up significantly, or msft raises the price of vista relative to what they're charging for xp.

    • <Sadly, recent financials disagree with you.>

      Would those financials be the same ones that show a 4% YOY earnings growth rate even when you add deferred earnings as if they were earned and even with a promised copy of Vista was included "free" (or heavily discounted) and when compared apples to apples?

      Those financials?

    • "no, i'm not at all saying noone's going to upgrade to vista."

      well, at least you'll get that part right.

      "i'm saying that it won't make a huge difference to the current situation in terms of moeny coming in"

      that's because you're clueless fcvk who doesn't understand the licensing model.

      "i don't believe there's any sustantial pent up demand for it"

      Sadly, recent financials disagree with you.

      "to the degree that consumers are gonna run out an buy new machines just to have it."

      Another clueless statement. The bulk of MSFT's revenue comes from business not consumers.

      "corps won't be upgrading to it en masse for 12-18 months"

      Recent financials and EA renewal rates indicate otherwise. But either way, it's a large incremental revenue stream.

      "so where's the huge revenue spike you seem to be expecting gonna come from?"

      What's the average selling price for XP vs Vista? Answer that, and maybe you'll grab a freakin clue.

    • dynamite_as_wrathful_pig dynamite_as_wrathful_pig Jan 28, 2007 2:49 AM Flag

      yeesh. wtf. start thinking a bit.

      no, i'm not at all saying noone's going to upgrade to vista. i'm saying that it won't make a huge difference to the current situation in terms of moeny coming in, and that after an initial bump due to essentially the windows fanboy crowd, nobody's going to rush to vista, and it'll seep into the marketplace thru h/w upgrades, and by that, i mean new machines.

      i don't believe there's any sustantial pent up demand for it to the degree that consumers are gonna run out an buy new machines just to have it. even fewer will upgrade their existing h/w to have it if it isn't recent enough to run it already.

      corps won't be upgrading to it en masse for 12-18 months, and when they do it'll just be part of their sa agreement.

      so where's the huge revenue spike you seem to be expecting gonna come from?

    • dynamite_as_wrathful_pig dynamite_as_wrathful_pig Jan 27, 2007 11:43 PM Flag

      >>>That hasn't been true throughout Microsoft's history. Why would things suddenly be different?<<<

      because the industry - both h/w and s/w - has matured. thereisn't a need for upgrades like there was way back when.

      >>>Again, you are saying that things will be different than every new release of Windows. Saying something like this is akin to saying that Microsoft hasn't make any money from Windows since the 90s. This is absolutely absurd and shows a phenomenal misunderstanding of the company.<<<

      that's a nonsensical interpretation of what i'm saying. see above.

 
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