Microsoft Corporation develops, manufactures, licenses and supports a range of software products, including scalable operating systems, server applications, worker productivity applications and software development tools. For the 3 months ended 9/30/00, revenue rose 8% to $5.8B. Net income applicable to Common before acct. change rose 18% to $2.58B. Results reflect accelerating deployments of Windows 2000 and higher investment income.

January 7, 2001

Microsoft reached an all time high of $119.94 in December 1999. It seems incredible that this stock, which is a major component of the Dow Jones Industrials and the NASDAQ, lost 66% of its value when it apparently bottomed one year later at $40.25. Slowing earnings are definitely a concern. However, the company is one of the most profitable in the world and they continue to dominate the software industry. With a P/E of only 27.14, Microsoft appears to be a solid value at these levels. In the short term, Microsoft may get a much-needed shot of positive PR when it gives a demonstration of its Xbox video-game technology in Las Vegas on Saturday. Impressive technology can still wow investors and get them reaching for their checkbooks. Technically, MSFT appears to making an important base. If the stock can trade above resistance of $52.00, it could easily rally a quick 6 points and close a trading gap. The MACD turned positive this week, which is a good indication that the worst could be behind the stock. OBV and Money Flow also appear to have made important bottoms, as vigorous selling seems to be tapering off. The path of least resistance should be up. We will look for the 5-dma, now located at $45.69, to provide near term support for the stock.

Picked on January 7th @ $49.00
Change since picked +0.00
Stop Loss @ $45.00

January 11, 2000

The NASDAQ (COMPX) surged higher for the third day in a row. One of the better performers was Microsoft, which continues to attract value technology investors. Steve Ballmer, the CEO of Microsoft, helped to ease investors concerns when he issued comments today indicating that Microsoft was in a better position than most technology companies to weather a global slowdown. The comments were made after a speech given at a private Morgan Stanley Dean Witter conference. Microsoft gave itself some more good press today when it announced that it will develop a new voting system in conjunction with Dell Computer (DELL) and Unisys (UIS). The new system, entitled E-action Election Solutions, should solve the problems caused by antiquated systems that resulted in the infamous problems in Florida. In our last report we predicted that a move above the $52.00 resitance should result in a gap-closing rally to $56.00. This move was nearly completed today. Now we would like to see a close above $56.00, which should extend the rally to at least $60.50. Before this move can occur, MSFT also needs to climb above resitance provided by the 50-DMA of $58.41. Please note, that we now see some mild support at $49.75 and we have subsequently raised our stop to $49.50. The MACD continues to move strongly higher. The OBV and Money Flow are both moving nicely off their lows.

Picked on January 7th @ $49.00
Change since picked +6.00
Stop Loss @ $49.50

January 9, 2001

Microsoft continues to shine in its unaccustomed role as a "bargain" stock. There is definitely still some cash out there swirling about and Microsoft appears to be a relatively safe place to put that cash. Despite last year’s bad press, the fact is Microsoft remains the largest and highest profile software vendor in the world. Over the weekend, Microsoft unveiled its entry into the lucrative home video game market with its Xbox, which should be ready for shipment by the fall. If the unit lives up to the hype, it could be very profitable. To further appease couch potatoes, Microsoft and La-Z-Boy (LZB) officially launched an "e-cliner" today. The cyber space recliner will be filled with high tech goodies that will enable its owners to access the Internet from the comfort of a traditional recliner. In market action, MSFT briefly traded above its gap at $52.00. Although the stock pulled back near the close, it appears likely that it will soon attempt to close the gap from $52.00 to $55.38. To that end, the MACD is in the middle of a positive reversal, which confirms that the path of least resistance appears to be up. What’s more, the Money Flow and OBV are also moving up from their bottoms. Today's low of $48.00 should provide support tomorrow.

Picked on January 7th @ $49.00
Change since picked +2.81
Stop Loss @ $45.00