Microsoft Corp (MSFT): Microsoft set for continued strong free...

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Tuesday, 08/09/2005 4:12:46 PM

Tuesday, August 09, 2005 4:12:46 PM

Microsoft set for continued strong free cash flow

Standard & Poor's Equity Research reiterated a "strong buy" on Microsoft

Standard & Poor's Equity Research reiterated a "strong buy" on Microsoft ahead of the company's fiscal fourth-quarter earnings report on Thursday.

S&P Equity Research expects the software behemoth to earn 31 cents per share from operations on revenue of about $10.2 billion. "With our expectation of continued strong free cash-flow generation," the research firm said, "we believe that Microsoft (nasdaq: MSFT - news - people ) ended the June quarter with approximately $40 billion in cash and short-term investments, and no debt."

"With its shares trading at a discount to peers, or 17 times our calendar 2006 operating EPS estimate of $1.52, and with our 12-month discounted cash-flow-derived target price of $33, we strongly recommend purchase," S&P Equity Research said.