How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 483.03

+0.5%

Dec 5 9:30 AM EST

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To: Cy who wrote (43980)	4/30/2000 6:40:00 PM
From: mozek	Read Replies (1) of 74651

Interesting story, along with the implication that Microsoft's sale of puts and its inability to buy back stock combine to create a double blow. In fact, I believe that the puts, if anything, help to offset the inability to purchase stock at current prices. When Microsoft sold the puts, it received a time premium that is effectively earned interest on the potential capital needed to purchase stock at expiration. If, they received $10 for a put sold with a strike price of $70, then being put the stock in June (after the lockup period) will effectively enable them to purchase the stock at $60. While I'm using these figures solely to simplify the explanation, the basic idea is that Microsoft will either get to retroactively purchase shares at the discounted price or keep the money from the put sale with no further liability. Of course, this was the rationale for beginning the put selling program years ago. It will be interesting to see what actually happens, but I wouldn't be surprised to see the puts expire worthless. The completely over-the-top character of recent events, along with Steve Ballmer's continued commitment to employees have probably helped galvanize the company's internal morale more than anything in quite a while. Talking to people inside the company, I hear a renewed sense of spirit and resolve from the most surprising places. Mike

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