Friday, October 13, 2006

Is that what I think it is?

Don't look now, but on news that MSFT is basically caving in to the EUC's latest demands and that Vista will be shipping on schedule, MSFT notched a new 52-week closing high and on big volume. Did you ever think it would feel this good just to get back to where you were a year ago? Such is the value, I guess, of low expectations. So where do we go from here? 100M+ volume days have often signaled at least a short-term change of direction historically. Someone else apparently thought so too and used this opportunity to unload a boat load of shares around 1:15pm (insiders? hedge fund?):

That didn't help, and if you wanted to be critical you could point to the limp into the close while the general market rallied. Still, looking at the stochastics, we're not at the overbought levels that normally signal a reversal. Also, we still have that shareholder meeting ahead, and as I posted previously, you gotta know the management team isn't keen to have the stock lose ground into that. So while I'm sure that when the quarterlies come around we'll see that a ton of the funds earmarked for the failed tender have been spent securing this recent runup, don't be surprised if they kept a few billion around just in case they needed to goose the stock heading into that event. Bottom line, I'd say it's too close to call. Today may have been the classic "exhaustion top" at least for now, or perhaps the beginning of something more interesting - like maybe another attempt to break out of the 3 year-long trading range? A lot will depend on whether real buyers emerge - as opposed to the company - and that will likely be driven by news on the earnings front. Guess we'll just have to wait and see.

Meanwhile, if you're MSFT senior management and feeling cocky about the recent stock performance, don't be. While you've been busy using $40B more of our money to help the stock recover what you managed to lose via your incompetence during the past year, others like ORCL has been busy making new 4-yr highs. Indeed, ORCL just joined AAPL (and others) in having outperformed MSFT over the past 10 years:

Much of that enthusiasm - like AAPL - reflects good old earnings acceleration not to mention the excellent job Oracle is doing wrt cost control. Whether that demonstrates the long-term superiority of Ellison's "buy versus build" strategy over MSFT and if so, whether that's sustainable, remains to be seen. Still, outperformance over 10 years - who'd have thunk it? Quoting Ballmer, we just must not be taking a long enough viewpoint. Right.


  • Other things to note...while I was impressed with the rally over the last two days...did you notice the downgrade today to "hold" from "strong buy" from S&P Equity Research.

    Not sure what impact that had on things, or has in the future (like Monday). Also, I'm curious as to how much of this is just due to the overall market rally. As you mentioned, we closed a penny shy of the 52 week high. The end of day downward pressure seemed to be buoyed by the bullish Dow. Imagine if the Dow were lame this week, we'd probably be down right?

    Still glad I sold at $28, but I'll hold my remaining options until something pops.

    By Anonymous Anonymous, at 7:19 PM  

  • "did you notice the downgrade today to "hold" from "strong buy" from S&P Equity Research."

    Yes, but thx for posting the link. Given their multi-year track record on MSFT (right up there with GS analyst Rick Shurland's), I might have to file that as a contrarian bullish indicator :-)

    By Blogger MSFTextrememakeover, at 9:44 AM  

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