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Strategies & Market Trends : Cents and Sensibility - Kimberly and Friends' Consortium -- Ignore unavailable to you. Want to Upgrade?

To: KevinMark who wrote (80575)	2/29/2000 9:12:00 PM
From: puborectalis	Read Replies (1) \| Respond to of 108040

MSFT on the prowl.......SEATTLE, Feb 29 (Reuters) - Microsoft Corp. said on Tuesday it will buy Israel's Peach Networks Ltd., which provides Internet services over cable television networks, in a deal the software giant said will let it deploy interactive TV to millions of previously unreachable digital set-top boxes. Peach Networks, headquartered in the Israeli city of Or-Yehuda, is owned by Haifa, Israel-based Elron Electronic Industries Ltd. (ELRNF: Research, Estimates) and its subsidiary, Elbit Ltd. (ELBTF: Research, Estimates). Microsoft said the purchase of Peach would give it the ability to offer e-mail, Internet, shopping and entertainment services through its Microsoft TV platform to digital cable boxes that were designed before the rise of the Internet. "For quite some time we've been looking into a variety of technologies that would not isolate the digital set-top boxes that were really designed before the Internet revolution," Alan Yates, director of Microsoft TV platform strategy, said in an interview. The Redmond, Wash.-based software powerhouse has been pushing its Microsoft TV platform as it strives to develop a range of non-PC devices that analysts say are the next big market for Internet services. Although Microsoft has led the television-based Internet service with its WebTV product, analysts expect it to face stiff competition from a similar service being rolled out by America Online Inc. (AOL: Research, Estimates), the country's biggest Internet access provider. While the latest set-top boxes contain powerful chips and software that can run rich interactive features like e-mail and Web browsing, millions of older boxes were not designed with such abilities in mind. Peach's technology processes such interactive features from a cable network's servers, the workhorse computers that store and deliver data and multimedia content, and delivers it to the consumer's box. Yates said that would let Microsoft potentially reach the 4 million customers that are forecast to be using such low-end or older boxes by the end of this year. "We think it's a very nice addition to the menu of products that we offer, and in particular solves a key problem for network operators. It allows them to bring those services to those boxes as well," Yates said. Although Elbit stopped short of saying it had closed a deal with Microsoft by instead declaring it was in "advanced negotiations," Yates said that wording was a requirement of Israeli law that such deals be publicly declared before they are officially finalized. "We're both comfortable that the terms of the deal are complete," Yates said. Elbit, which is 42 percent owned by Elron, said it would receive about $43 million in cash for its 57 percent stake in Peach, and would pocket about $30 million in net capital gains. Elron said it would record a gain of about $12.5 million. Microsoft shares fell 2-3/16 to 89-3/8 in trading on the Nasdaq on Tuesday. Nasdaq-listed American depository receipts, or ADRs, of Elron rose 7/8 to 50-3/8, while Elbit ADRs fell 52/64 to 18-7/16. Both companies' stock rose in Israel on Tuesday amid rumors of the deal. stories Microsoft gets Broadband - Feb. 23, 2000 Microsoft teams with Gilat - Feb. 16, 2000 Microsoft teams with Intervu - Dec. 20, 1999 sites Microsoft Investor Relations Peach Networks