Wind River going up, up, up! Message Board

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Technology Stocks : Wind River going up, up, up!

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To: saukriver who wrote (8736)	10/29/2000 12:11:49 PM
From: Allegoria	Read Replies (1) of 10309

Please explain how you think a $5B preferred stock investment in AT&T under which AT&T gave Microsoft no promise of exclusivity for Microsoft products has a potential to add enormous business growth for Microsoft. These types of investments are occurring with increasingly frequency. What do you think $5B buys you? This is the business world...not a fairly tale. AT&T needs money to build out it's huge network. $5B to Mircosoft is not a killer sum of cash...it IS getting shares at a great price btw. $5B buys you the opportunity to favorably market your products to one of the leading providers of broadband services in the USA & long distance providers in the world! Your complaint against an MSFT product (bad old MSFT) only supports this thesis; it is often not the best product that wins, but the best "promotion" of the product that ensures widespread adoption. And adoption spells success. Can you imagine if a few of the pieces in Microsoft's strategy come together how huge the gains could be? I don't know if you know it or not, but AT&T chose Liberate's middleware software in their latest trial. But don't think for a minute that the $5B investment doesn't deliver a willing ear... Stock buybacks were not IBM's problem. Disagree. The conscenous of most analyst is that had IBM been able to put that capital to use expanding its markets and/or market share (notably in storage!) it would be far better off for all shareholders. Stock buy-back programs are very easy to analyze. Simply, if a company does not see any other investments it needs to make (risk evaluation) that will return more (ROE, ROA) then either wait and draw interest on the money or buy your own shares back (thereby decreasing your market liquidity). But an investor has to ask: Given that issuing shares is far from free (normally the stock price is negatively influenced when dilution occurs except in a split, plus other costs related to the issuance) - why were the shares issued in the first place? What has changed in the market place? Has management lost direction? No better investments...in this dawning of the internet age? Hard to believe... Good luck, Eric

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