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Wednesday, February 8, 2012


At the end of December, I highlighted why MSFT was going to push higher in 2012. Well, very early on in 2012, MSFT exploded from its consolidation pattern, and has effectively removed its discount.

The level of appreciation has put MSFT in a very curious situation. Its forward PE is now the same as AAPL.

Put in another perspective, a company who is LOSING device market share (shrinking device usage via Windows) verse a company who's device usage (iOS) is surging, are trading with the same valuation.

Also, a company (MSFT) who's business model is to copy the market leader (AAPL) is valued equally to the market leader. (With the exception of Kinect.)

The valuation does not make sense. If anyone got into MSFT prior to the big move, congrats. It may be smart to hold MSFT for the dividend yield, especially if anyone has the stock near 28-29.  But fundamentally, MSFT should stall at current levels.

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