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Technology Stocks : Apple Inc.

AAPL 278.06

-0.2%

Dec 11 3:59 PM EST

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To: Linda Kaplan who wrote (11125)	4/13/1998 6:21:00 PM
From: Marc Newman	Read Replies (2) of 213176

Some thoughts on the MSFT patent deal, from one of my correspondents: <<I recall that CFO Anderson's TV interview with CNBC on that day contained a reference as well. He stated that, altho he couldn't be specific due to non-disclosure agreements, the patent payments were more significant than the announced investment by MS. He was suprisingly emphatic concerning the financial importance, probably since the reporting was so full of the typ. MS "investment" coverage. My impression was that since the payments were to be spread out they couldn't reach the threshold of "material" in typical results reporting. This is an easy threshold to miss in MS terms. My guess was that the totals were in excess of 300 mil...and everything helps. The agreement also contained the mutual licensing of existing and new patents for 5 years on both sides. Since MS had already breached these rights, they didn't have to remove the code from their OS. MS's acquisitions include patents making these technologies available to Apple if the deal was that favorable. Since it was "secret" we may not know until something obvious shows up. It may bep in the ancillory technechologies that MS utilizes in the OS that are patent based vs. copyrighted code which wasn't covered. Compatibility issues may be overcome in some areas of these patented technologies.>> This is how I remember it too and this part of the deal remains an interesting X-factor for Apple. Any CPA-types out there want to take a crack at how large payments could be before they would be material (to Apple, not Microsoft!)? Perhaps the payments are spread out over five years, the length of the patent sharing? Today was easy money in Apple--the stock always has at least a little run before earnings. The last time we didn't have a preannouncement (October) we ran up and then sold off about an hour before the close. And earnings were disappointing. Watch this closely. Marc

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