Window Vista driving MSFT profit
4-26-07: Big bad Microsoft (MSFT) just reported Q3 profit; beating estimates by 4 cents per share (earned .50 cents versus the expected. 46 cents). This is hardly a surprise given the release of Window Vista. When Vista was first released, there were concerns about the product’s initial acceptance. These concerns lead several analysts to downgrade the stock. Since then, MSFT has been largely trading in the mid to high 20s.
It is now evident the early reports were inaccurate as Vista is actually doing quite well. We remain bullish on MSFT. This is the catalyst the stock needs, this stock should be trading in the mid-30s.
Comments
What do you think Microsoft’s numbers, particularly as they relate to Vista sales, mean for the box makers? We both agree that Dell is in deep, deep trouble. What are people thinking about in continuing to own or making new buys of this stock. HPQ is strong and getting stronger so that this information about Vista bodes well for them in my opinion. However, I think a speculative value play here is Gateway and these Vista numbers may give credence to this. AAPL, HPQ, DELL and GTW have all spent time in box maker hell. GTW is currently there and has been for some time. In spite of the fact that DELL’s share price has been declining for some time I feel the pain in owning this stock has yet to be realized if this accounting scandal it’s dealing with plays out into just a modest worst case scenario.
GTW, from all perspectives, is an absolutely terrible stock to own. When subjected to the smell test it reeks. However, that is one of the keys to getting value: Buy when nobody else wants it. GTW had a recent price run-up based on speculation that it might be bought out. However, when this did not immediately pan out the stock price declined but did not go back down to prebuy-out rumored lows. The stock has been under accumulation for some time and the chart is a value play wet dream: Reverse head and shoulders pattern with an ascending triangle formation that has been in the works for several months.
One last area of interest regarding GTW is that a couple of firms that do research into PC sales suggest that sales are declining. However, this is the same type of know-nothing thinking that indicated Vista was not doing well. Thoughts?
Posted by: Stock Detective | April 30, 2007 06:55 AM