How high will Microsoft fly? Message Board

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Technology Stocks : How high will Microsoft fly?

MSFT 477.74

-2.5%

Dec 3 3:59 PM EST

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To: johnd who wrote (50620)	10/4/2000 7:32:16 PM
From: alydar	Read Replies (2) of 74651

The convertible preferred securities have a face value of $5 billion, mature in 2029 and pay interest at an annual rate of 5 percent. Microsoft can convert the securities into 66.7 million shares of AT&T common stock at a price of $75 each. john, on paper, these securities are worth about one billion less than when they purchased them. Thats the bottom line and their balance sheet will reflect the dilution. Also, if I am correct, 5% of 5 billion is $250 million annually in other income. After taxes it probably comes out to somewhere about $125 mil. To date, this is not a good investment. Basically, MSFT has a strike price of $75 a share to convert the preferred stock into common stock. MSFT is locked into this investment unless T's stock goes above $75 a share or they wish to sell at a loss. To me, they tied up 5 billion dollars for a long period of time. Personally, I would sell the securities at a loss and move on.

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