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Just drawing attention on fact MSFT is on its 15 year (lower) trend line on a
log chart...
FWIW
Gwenn
BobR wrote:
> Since last week when MSFT was at 80 if you sold May puts against cash, one
> strike in the money each time it dropped a strike, you would get about $6+.
> That was one strike's worth plus a buck. That put your effective cost at
> one strike lower. Like today if you timed it and sold the May70P the take
> was 6 7/8 minus commish and the stock ended the day at 66 5/8. If you get
> assigned at 70 then you effectively bought it at 63+ all things considered.
> If the stock rebounds above 70 without assignment, you keep the 6 7/8 or
> cover at some point on the way back up as time decay and volatility take
> their toll on the put in your favor. So even if you are assigned you made 6
> 7/8 on 35(50%margin) for percent gain of 19.64% in one month or less. If
> you then write 70 calls you can probably rake in another $5 so 6 7/8 plus 5
> = 11 7/8 or 11.875/35 = 33.93% gain for one month. Doesn't seem like a bad
> day job to me.
>
> BobR
>
> ----- Original Message -----
> From: Ned Markson <cnedgo@xxxxxxxx>
> To: <realtraders@xxxxxxxxxxxxxxx>
> Cc: <realtraders@xxxxxxxxxxxxxxx>
> Sent: Monday, April 24, 2000 1:06 PM
> Subject: [RT] Re: More MSFT
>
> > MSFT is a past master at the art of sandbagging the market. I find that
> > the contrarian approach works well when you view their earnings
> > warnings. In the case of today's news, it looks like a perfect setup.
> > It's clear that even if they lose today's battle they still have a
> > magnificent opportunity to ultimately win the war :) It's sort of like
> > chopping a worm in half. Where there was one, now there are two with an
> > identical gene structure -- ultimately, the stockholders, if they are
> > long termers, will win also.
> >
> > Ned
> >
> > JW wrote:
> > >
> > > >From TheStreet.com email newsletter...
> > >
> > > JW
> > > ----------
> > >
> > > Herb on TheStreet: Does Microsoft Really Have Reason to Be This Gloomy?
> > >
> > > By Herb Greenberg
> > > Senior Columnist
> > > 4/24/00 11:23 AM ET
> > >
> > > >From the contrarian department: "Maybe the real story is: why does
> > > Microsoft (MSFT:Nasdaq) want to knock its stock down?" So started a
> > > lengthy email from Michael Murphy of the California Technology Stock
> > > Letter, in response to my question late Sunday night: "What's your take
> > > on Microsoft, now?" The "now" referred to his recommendation to buy
> > > Microsoft two weeks ago after the company warned of a
> > > weaker-than-expected third quarter.
> > >
> > > So, what does the outspoken Murphy think now?
> > >
> > > "They're lying," he wrote back. "Again."
> > >
> > > His reasons:
> > >
> > > "A. They have lots of cash, so if they can cut off the flow of cash to
> > > everyone else it's easier for them to win?
> > >
> > > B. It lowers the cost of the stock buybacks and reduces the accounting
> > > charge for options?
> > >
> > > C.???"
> > >
> > > He went on to say he was "shocked" to see Cramer's comments, in his
> > > initial Microsoft conference call column, say, "I have never heard this
> > > company talk down earnings before." "It does it EVERY TIME," Murphy
> > > says. "It brought the whole sector down in July '99 and July '98 by
> > > forecasting sharp slowdowns in its business that never happened." (He
> > > says he went to 100% cash in his newsletter on July 14, 1999, because
> > > he expected Microsoft to forecast slow growth on the conference call.)
> > > "A simple review of its quarterly conference calls for the last four or
> > > five years," he continues, "will show its forecasts are almost always
> > > lowball and usually are WAY wrong. It will say its revenue growth is
> > > about to slow when it is about to accelerate. It will say PC sales look
> > > weak right after Intel (INTC:Nasdaq) has said they look strong -- and
> > > Intel turns out to be right.
> > >
> > > "Look at this call. They sent the controller to do most of it. Even
> > > though revenue was light, it beat the number by 2 cents. The damage to
> > > the stock was already done, why not just meet the number and save the 2
> > > cents for the June quarter? So instead of reporting 41 cents for March
> > > and then 43 cents for June, now [it has] done 43 cents and set itself
> > > up for sequentially flat.
> > >
> > > "But no! Now he (and/or the CFO, who joined the call later) goes on to
> > > say that estimates for the June Q look a little high and he'd shave a
> > > penny or two off them! So now he's created expectations for a
> > > sequentially down quarter. Of course, you have to believe that a
> > > Microsoft June fourth [fiscal] quarter, including a full three months
> > > of Windows 2000 shipments, can somehow be weaker than the
> > > post-Christmas March quarter with almost no OEM sales for the first six
> > > weeks. Notice that it said OEM sales were weak in January and February.
> > > Funny how it didn't mention March, when OEM sales took off and have
> > > continued strong.
> > >
> > > "THEN it had the gall to say although it hasn't finished its FY '01
> > > planning process, the Street consensus of $1.93 looks about a nickel
> > > high. I submit that at this point in time there is no statistically
> > > significant difference between an estimate of $1.93 and an estimate of
> > > $1.88, especially given that it hasn't even finished the planning
> > > process. So why did it say that, other than to lowball the Street and
> > > knock the stock down?"
> > >
> > > Maybe so it can show the government that Microsoft is not really the
> > > monopoly it's being made out to be because its stock has nearly been
> > > halved from its high? Hey, in this wacko world, stranger things have
> > > happened.
> > >
> > > Herb Greenberg writes daily for TheStreet.com. In keeping with TSC's
> > > editorial policy, he doesn't own or short individual stocks, though he
> > > owns stock in TheStreet.com. He also doesn't invest in hedge funds or
> > > other private investment partnerships. He welcomes your feedback at
> > > herb@xxxxxxxxxxxxxx Greenberg also writes a monthly column for Fortune.
> > >
> > > Mark Martinez assisted with the reporting of this column.
> >
> >
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