Microsoft Investors, You Have Been Warned

Since that time, Microsoft gained more than 18% -- until Wednesday.

Until Mr. Reback is kind enough to let us know when the run is over, we're left to our own devices in deciding how much stock to put into the average expectations of Wall Street analysts of, say, a price target of $28, or fiscal 2009 (June-ending) revenue of $64.1 billion.

Not a lot, seems to be the mounting evidence. Keep in mind the bleakness of what Intel has offered up to the tech sector: a revenue forecast that puts 2008 below what the company posted in 2007, and casts serious doubt that expectations of a 10% decline in revenue expectations are pessimistic enough.

For Microsoft, even the moribund 6.1% growth expected in fiscal 2009 revenue has to now be suspect, and since its next fiscal year starts on July 1, so, too, the projections for 7% growth in fiscal 2010.

And don't just go by Intel: rumors of an upcoming double-digit-percentage employee purge at Microsoft (as early as this month) appear to be increasingly accepted as a given.

Here we are, January 2009 and Microsoft may put as many as 10,000 employees on the streets. Given what that would say about the company's business expectations, do you like your chances at a 40% rise in the stock from here over the next 12 months?

An even longer-term problem for Microsoft is whether its days of double-digit growth are over. Even when PC demand picks up again, Microsoft's competitive position seems increasingly less secure, as low-cost "netbooks" merge with high-end smartphones to entice consumers who are trending toward portable computer/phone/music player. Great for companies like Apple(AAPL Quote) and Google(GOOG Quote) trying to be the mobile operating system, but not so great for Microsoft.