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By Bob Djurdjevic

That Microsoft is the Wall Street's
most admired stock should not
surprise anyone anymore. The
software marketing wizard's value is
greater than those of industrial giants
General Motors, Ford and
AT&T--combined! It exceeds that of
the nation's top financial institutions,
like BankAmerica, Chase Manhattan
and Citicorp--also combined! It's
bigger than the combined value of the
IT industry's veterans--IBM and
Hewlett-Packard--even though both
of these computer giants experienced
54% and 30% surges respectively in
their stock prices in the last 12

Nor does the investors' enthusiasm
for Microsoft seem to have any
bounds. Its latest earnings rose 57%;
revenues were up 31%--an
impressive performance indeed,
according to a Wall Street Journal
September 18 survey of the world's
top 100 publicly traded companies.
But Microsoft's market value more
than doubled between July 1996 and
June 1997 (up 115%!).

An example of a market folly?
Actually, the preceding is still a fairly
mild form of irrationality. At least
Microsoft's stock price and its
earnings were trending the same
way--up. But how does one explain
the market values of Lucent
Technologies and Eli Lilly, for
example, which also roughly doubled
even though their earnings had
declined, while the revenues rose
only 9% respectively during the past

In short, one cannot help but wonder
if the stock market has ceased being a
reflection of the companies' financial
performances, as students are still
taught in our schools.

For example, did you know that Sun
Hung Kai Properties is the second
most valuable stock in the world,
after Microsoft, in terms of its market
value-to-revenue ratio? Or that this
Hong Kong-based real estate
company's net margin of 49% is the
highest of all the survey's top 100
companies, even ahead of Microsoft's

"Sun what?", do I hear you say?

If so, maybe you need a new
investment advisor. One who thinks
globally, the way the markets work
these days. For the net margins of
Singapore Telecom and Hutchison
Whampoa (also of Hong Kong) were
also ahead of Microsoft's. Yet none
of these highly profitable Asian
companies are exactly household
names in America, are they?

Maybe that's because we still tend to
look at businesses using the industrial
era yardsticks--assuming that bigger
is better. It is not. In the world of the
industrial giants, Sun Hung Kai
Properties', Singapore Telecom's and
Hutchison Whampoa's revenues are
downright puny ($2.9 billion, $3.2
billion and $4.7 billion respectively).
Yet their market value (around $30
billion), is on a par with, say,
Texaco's, Honda Motors' or Deutsche
Bank's, each of which has revenues
more than an order of magnitude

What the three "Asian tigers" lack in
bulk they more than make up in
nimbleness and profitability. And
marketing savvy. Which is why they
are the leaders of a new global
market, one which rewards the
quality not the bigness of business. In
the wake of this trend, a transfer of
wealth is already taking place--from
the industrial giants to the relative
upstarts such as Microsoft, Sun Hung
Kai Properties', Singapore Telecom
or Hutchison Whampoa.

Bob Djurdjevic is president of Annex
Research, a Phoenix, Ariz.
consulting firm. He writes about
economic and global affairs. Visit
him at

For additional Bob Djurdjevic columns on geopolitical

subjects (published in The Washington Times, Chronicles

and other publications), visit the Truth in Media Web site

("Index of Djurdjevic's Columns" section).

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