Stock Profits: Getting to the Core—New Fundamentals for a New Age

not difficult, and the conclusions we drew were very clear. In the

case of IBM, you would need to gain more information before being

able to quantify a forecast of future growth.

Microsoft

Microsoft’s (http://www.microsoft.com) reported earnings were

not changed in our analysis. The relatively minor core earnings ad-

justments were immaterial. Like IBM, Microsoft is involved in sev-

eral lines of business; however, the trend in its primary segment,

software, was consistent and represented the overall revenue trend.

Revenues increased each of the three years in our analysis, but net

income was more volatile. We repeat the first four steps in access-

ing ...