Wow. As Yahoo rebuffs them and Microsoft shares continue to take a beating from what appears to be Yahoo aquisition unhappiness, the PE of this mega company is looking nothing short of spectacular. Some would argue that Microsoft is slowly dying due to the massive changes in the way people and businesses use software, but it’s foolish to think Microsoft’s prospects are dim under the current conditions. In my view they are simply making too much money, and remain a key player in a key industry, to deserve this low market valuation.
If the Yahoo merger happens the PE at MSFT will take a hit, but it would clearly remain well under 20, a very modest PE for a company that still has significant growth potential.
But, I guess like other investors I’m a herd animal and fearful, so I won’t be buying MSFT….quite yet.
Disclosure: Long on Yahoo, no Microsoft position.