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Microsoft Invests $50 Million In Concentric, Expands Pact
Dow Jones Newswires June 22, 1999
SAN JOSE, Calif. -- Microsoft Corp. said Tuesday it agreed to
invest $50 million in Internet-service provider Concentric Network
Corp. and to expand an existing Internet-services agreement for
two more years.
Concentric said it will spend $7.5 million to advertise its Internet
protocol network services on Microsoft's MSN network and will
develop a co-branded version of the MSN portal for certain online
subscribers. Concentric also will co-market Microsoft Windows
NT server-based application hosting services.
The deal extends for two years
Concentric's contract to supply network
services to Microsoft's WebTV. The
contract, which began in January, will
now expire in 2002. Concentric estimates the value of the pact at
$150 million to $200 million.
Concentric said Microsoft's investment consists of 7%
convertible redeemable preferred stock due 2010. The preferred
stock may be converted to common shares at 20% above the
current market price. Microsoft shares lost $2.4375, or 2.7%, to
$86.50 Tuesday on the Nasdaq Stock Market.
Separately Tuesday, Concentric said it signed a 10-year deal
with Tulsa, Okla.-based Williams Communications Group Inc. that
expands the companies' previous relationship.
Williams owns and operates a nationwide fiber-optic network
providing voice, data, Internet and video services for
communications-service providers and is bidding to become one
of the country's main providers of wholesale high-speed
communications services. Its parent company, Williams Cos., is
the largest natural-gas shipper in the U.S.
Concentric expects to purchase $175 million in Williams network
capacity and other products and services, while Williams will buy
$35 million of Concentric services. In addition, Concentric said it
will develop a national dial-up network with Williams, while
Williams will formalize its reselling of Concentric
Internet-networking services.
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One of Redback's customers.
--Bill |
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