Thread---Microsoft Corp.
Dow Jones Newswires -- July 19, 1999
DJ Microsoft's Sidewalk Sale Could Signal Tracking Stk>MSFT
By Maria V. Georgianis
NEW YORK (Dow Jones)--Microsoft Corp.'s (MSFT) decision to sell part of its MSN Sidewalk Internet city-guide service could suggest that the company is closer to creating a tracking stock for its Internet business, analysts said.
With its pending sale of the service to Ticketmaster Online-City Search Inc. (TMCS) and a new content relationship with Ticketmaster, Microsoft raises the profile of its MSN portal and enhances the attractiveness of a potential tracking stock, said Warburg Dillon Read analyst Andrew Roskill.
Under the terms of the deal, Ticketmaster's market leading CitySearch service will become the exclusive provider of arts and entertainment city guides and primary provider of online ticketing and personals on Microsoft's MSN portal.
Roskill said it's believed that Microsoft's overall Internet properties are losing money - although the company hasn't provided any specifics on this - but it is difficult to say if Sidewalk was deeper in the red than other pieces.
The deal may also show that Microsoft has a "greater sensitivity" with the performance of each of their Internet businesses in advance of a potential tracking stock, said J.P. Morgan Securities Inc. analyst William Epifanio.
Microsoft Monday confirmed it would sell the entertainment portion of MSN Sidewalk to Ticketmaster Online-CitySearch in exchange for a 9% stake in the company worth $240 million. The stake may eventually be increased to as much as 13%, including exercised warrants.
The deal, in the works for several months, was initially reported Monday in The Wall Street Journal.
Microsoft's stake in Ticketmaster makes it the largest external shareholder, excluding USA Networks Inc. (USAI).
Ticketmaster Online-CitySearch is the market leader in local city-guide content on the Internet, according to Forrester Research Inc. The service includes online auctions, e-commerce, local events and restaurant reviews.
Microsoft's Sidewalk was "stagnating," according to Forrester Research analyst Lisa Allen, who last month predicted that Microsoft would exit the city-guide service, but maintain Sidewalk's national Yellow Pages directory. - By Maria V. Georgianis; (201) 938-5244;
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