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To: Eric Wells who wrote (78661)	9/26/1999 2:23:00 PM
From: Glenn D. Rudolph	Read Replies (2) \| Respond to of 164684

Eric, Ballmer can state all he wants that MSFT is valued too high. He works there and only has to answer to his boss and maybe some growling other employees. However, he made reference to the entire market as though he is a specialist on the market as a whole. See this from TWJ: "September 24, 1999 Steve Ballmer Gets a Lesson In Perils of Being a Big Wheel By JASON FRY and TIMOTHY HANRAHAN THE WALL STREET JOURNAL INTERACTIVE EDITION ALAN GREENSPAN knows that even an offhand remark of his can have a dramatic effect on markets, adding or subtracting billions from the market capitalization of scores of companies in a matter of minutes. Now Microsoft Corp. President Steve Ballmer knows it's a burden he has to bear, too -- at least when investors have nothing better to do than find something vaguely concrete to worry about. On Thursday, Mr. Ballmer was addressing a lunch crowd at a Seattle conference held by the Society of American Business Editors and Writers, talking vaguely about Windows 2000 and the importance of the Internet --typical rubber-chicken-circuit stuff that's grudgingly covered and fills out the papers in the absence of more substantive news. The excitement came in the question-and-answer period, in which Mr. Ballmer -- responding to a question about what story isn't being covered these days -- opined that "there's such an overvaluation of tech stocks it's absurd" and added that "I'd put our company's stock in that category." "There's a gold-rush mentality," he continued. "When reality is out of line with things you get distortions that are not healthy." In saying so, Mr. Ballmer promptly kicked off a pretty unhealthy distortion of his own -- and presumably learned just how out of line with reality the mob that makes up the stock market really is. A couple of hours after that question-and-answer period, the Dow Jones Industrial Average had completed a 200-point drop, the Nasdaq Composite Index had racked up its fourth-worst decline ever, and Microsoft's market cap was considerably lighter (a cool $24.1 billion, in fact), as was Mr. Ballmer's own fortune. Forget having your own parking place. Heck, forget having your own garage. That's power. As is inevitable with anything Microsoft does, the next day brought conspiracy theories bubbling to the surface: The more unhinged of newsgroup and chat-room denizens intimated that Bill Gates's evil henchman had some devious plan that hinged on taking the wind of tech stocks. What was less discussed was the very distinct possibility that Mr. Ballmer had no inkling that a few offhand remarks, made as bored waiters brought out the coffee, would reverberate around the globe in the absence of anything better to talk about. As a Microsoft spokeswoman pointed out, nothing Mr. Ballmer said was all that different than comments he'd made before, without leaving traders clutching fistfuls of hair as the closing bell rang. And at the exact same conference, Credit Suisse First Boston Net analyst Lise Buyer had told the writers that tech firms' stock prices were overvalued -- again, without ripping billions off those stock prices. But Ms. Buyer isn't the No. 2 executive in the biggest software company on the planet, and on a dull news day, that made all the difference. In surveying the carnage, commentators noted that investors were worried about the Taiwan earthquake's effect on memory-chip supplies, and then added the usual after-the-fact explanations: The market didn't have much momentum, the technical charts didn't look good, and so forth. The more likely explanation: Everybody was nervous and seized on one of the only bits of news around as grounds for a full-scale freak-out. So Mr. Ballmer wasn't really to blame. But Richard Belluzzo should be forgiven if he had a little trouble with accepting that Thursday. Ironically, Mr. Ballmer's musings knocked Internet stocks for a loop on the very day that he and Mr. Belluzzo, the former Silicon Graphics Inc. chairman and CEO turned head of Microsoft's online efforts, were holding forth on a bevy of new Internet efforts from the software giant. One of the most important of those efforts is an initial public offering from Expedia, Microsoft's online travel service. By spinning off one of its Internet operations, Microsoft is hoping it will swiftly become one of those tech stocks caught up in a distortion of reality and win an absurd overvaluation. Expedia is a fine service that's been very successful, despite Microsoft's best efforts to kill it by getting it anywhere near MSN, its miserable leper of a portal. As such, it probably will get an absurd overvaluation from investors, once they calm down a little. Or at least it will if a chastened Mr. Ballmer keeps his mouth shut on slow news days. "