Mister Softee's Fallen and He Can't Get Up
Equity investors can't find a safer haven than Microsoft (MSFT). That's the conventional wisdom, and it was probably true in the past. But in the last three months, Microsoft has lost 15% of its value, more than twice the decline of the Nasdaq as a whole.
What's more, the world's largest independent software company has performed worse than 10 other software companies [see chart] with market caps of $4 billion or more, and worse than other "mega-cap" companies (valuations over $90 billion), including General Electric (GE), ExxonMobil (XOM), Intel (INTC), Wal-Mart (WMT) and Cisco (CSCO).
Even Hewlett-Packard (HPQ), which earlier weathered a grueling fight over the Compaq merger and is now enmeshed in the PC slump, is performing similarly, down 17% over the same time period.
Microsoft investors are being punished for a variety of problems, most of which are the products of the prolonged slump in IT spending.The serious bloodletting began after the company announced solid second-quarter results -- and disappointing guidance -- on Jan. 16. The stock closed that afternoon at $55.35 (presplit) and by Jan. 22 it had tumbled $4.35 a share, or 8%, to $51. The biggest disappointment: Rather than projecting earnings of $1.98, Wall Street's consensus, Microsoft said it expects (presplit) earnings per share of between $1.90 and $1.93 in fiscal 2003. But that's not all:
|Software and the Comp
Microsoft leads the pack downward
|Company||%Performance since Dec. 10|
|Source: Company reports|
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