Microsoft: Time to adjust your position

On April 25th after a drop in Microsoft shares, I recommended to buy Microsoft. I got busy with a Project and didn't track the stock. If you had bought Microsoft then in 22-24 range, it is time to prune your position. I would take 1/3rd off the table. I think it is still expected to rise to about 35-37 over the next 12 months as the PE adjust itself to 22-23 time the Jun 2008 EPS at the current estimate of 1.7. I would guess Microsoft is going to exceed the analyst estimates. Here is the three avenues of growth as I mentioned in my prior posts.

1> XBox 360: Main growth driver for financial year ending June 2007. Achieved critical leadership position in second half of 2006
2> New Office and Vista: Main growth drivers for June 2008 and beyond as the system stabilizes and corporations start adopting the OS.
3> Windows Mobile: This will add revenues to both the financial yeas ending in June 2007 and June 2008. I expect to see the tide turning towards Windows Mobile in 2007 and the momentum coming in 2008.

So, why am I preaching to take 1/3 off the table. Two reasons.

1> I like cash more than paper money.
2> I think the broader market is going to fall (Yes I still feel we will drop below 11500) and microsoft is going to fall with it.

In fact, for advance players, I would expect you to have a put on broader market instead on selling.

I will elaborate on point 2 in my next post early next week. Till then Happy Thanksgiving and have a great weekend. I am now mostly cash except some shares of my employers and two international mutual funds in my retirement account. I might have put that money to some use if I had time to look for for some other international index funds.