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To: puborectalis who wrote (51001)	7/16/1999 8:14:00 PM
From: puborectalis	Read Replies (2) \| Respond to of 120523

Microsoft Corp. (Nasdaq:MSFT - news) is moving closer to creating a stock to track its Microsoft Network properties in an attempt to capitalise on the market mania for pure-play Internet businesses, according to the Wall Street Journal. In addition, the largest companies haven't become buyers of Internet companies -- certainly not using cash -- because the Internet stock valuations are so high. But that could change as major corporations create ''dotcom'' stocks, spinning off Internet holdings to get higher valuations based on their growth potential. Microsoft Corp is reported to be set to make such a move, partly as a way to enhance its position in doing Internet acquisitions and also to acquire and retain talent. ''People in general in big corporations are trying to monetize their Internet investments -- whether through spin-offs or tracking stocks or IPOs,'' said James Feuille, head of investment banking and capital markets at Volpe Brown Whelan, the San Francisco brokerage. ''Once you've created that entity with higher valuations it can be used in making acquisitions.'' Posted at 4:13 p.m. PDT Friday, July 16, 1999 Microsoft hits record on expected Internet equity SEATTLE (Reuters) - Microsoft Corp. stock surged 5 percent Friday to a record high on expectations the software giant will establish a separate tracking stock for its Web properties to cash in the Internet investment craze. Microsoft declined to comment on a report the company might announce the new tracking stock at its annual meeting with financial analysts in Seattle next Thursday. A company spokeswoman said only that a tracking stock is an idea Chief Financial Officer Greg Maffei and others have considered ''several times over the past couple of years.'' But analysts said they thought the new issue was likely as the company seeks to unlock the value of its massive investment in online properties and attract and retain new talent in the face of competition from high-flying Internet startups. ''It would give Microsoft some additional currency to go acquire new Internet properties,'' said Bill Epifanio of J.P. Morgan. ''It would also give them options on those tracking shares that would help them attract good talent.'' Microsoft ended up $5.06 at $99.44, pushing the company's market capitalization past an unprecedented $500 billion and propelling Chairman Bill Gates' stake to nearly $100 billion. In addition to the tracking stock report, first published in The Wall Street Journal, Microsoft got a boost from a federal jury's decision to award Bristol Technology Inc. just $1 in the first antitrust trial against the company to reach a verdict. Analysts also said they expected Microsoft to beat the consensus estimate by one to two cents a share when the company reports its fourth-quarter earnings Monday. Microsoft is expected to report earnings of 36 cents a share, compared with 25 cents a year earlier, according to First Call. Microsoft executives long have complained the company's stock price does not reflect the full value of its Internet investments compared with ''pure play'' rivals like Yahoo! Inc. While Microsoft's stock continues to provide a handsome return for investors, the company has seen a growing trickle of defections by middle managers lured by the potential riches of Internet startups. The lack of an Internet-type stock currency also has been cited as one of the reasons the world's biggest software company has been unable to recruit a high-profile executive from outside the company to lead its online business since group Vice President Pete Higgins departed last year for an extended leave of absence. ''As they look out across the organization they realize they need some new blood at executive levels, but the executives they want really want to be running their own shops,'' said analyst Rob Enderle of Giga Information Group. A tracking stock theoretically would trade at some multiple of the estimated $800 million in annual revenues from businesses including MSN Internet access and related content properties grouped under the msn.com portal site. But the move would stop short of spinning off the properties into a separate company as advocated by some. ''My thought all along has been that what they should do is spin the thing off,'' said Scott McAdams, president of McAdams Wright Ragen, a Seattle brokerage. ''They're probably still of the mind that they can compete effectively as a very large organization and they're better off having all these things under one umbrella,'' he said. ''It's been the legacy of the company.'' Enderle questioned whether Microsoft was nimble enough to compete effectively in the rapidly consolidating Internet space, comparing the 24-year-old Redmond, Wash.-based company with lumbering giants like Hewlett-Packard Co. and International Business Machines Corp. ''They are not being thought leaders right now,'' he said.