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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: The Duke of URL© who wrote (41347)	4/6/2000 4:42:00 AM
From: Gary Ng	Respond to of 74651

Duke, Re: Its harder than you might imagine running a trillion dollar company. Yes indeed. And when everything is looking through the conspiracy theory glass, the situation can be ugly. Obviously, Microsoft's hand is not clean but is shooting one's toe with a 9mm pistol just because there is a fly on it the right move ? I doubt. Gary

To: The Duke of URL© who wrote (41347)	4/7/2000 4:03:00 AM
From: Dwight E. Karlsen	Read Replies (1) \| Respond to of 74651

Duke, you sound sincere and could well be right, but I'm not entirely convinced. Q #1: If MSFT can't trust Michael Dell when he says "I shipped x number of systems with your OS", why wouldn't he simply transfer a guy down to Round Rock to do ongoing audits? Michael Dell wouldn't turn him away, because he's got nothing to hide, right? It's a simple matter to keep someone honest, you just follow the government's example. Take for example all that sales tax that states collect, in states that have sales tax, like California and Washington State. Of course, they don't collect it directly, right? Businesses do, companies from little ones to big ones like Wal*Mart. So, why wouldn't a company, as you say, simply "forget" about some sales tax collected here, and some there, and it never gets reported or turned over to the state. That's where audits come in. If they find you've under-reported, they make an expensive lesson out of it, to make the company learn that they don't stroke over the agency. And then they put the company on permanent audit. Where would MSFT get the power to do that to Michael Dell? Simply put the wording in the contract. Michael Dell's not PLANNING on ripping off MSFT, so of course he won't be able to balk at signing it. Q #2: Sooner or later you're going to have to get down to PC units shipped, no matter what the payment is based on. So, why would MSFT trust Michael Dell's units shipped number? Michael Dell could simply clip several thousand off the real PC units shipped number. MSFT compares that with the total sales reported to the SEC by Michael Dell, and Michael tells MSFT, "hey, our ASP is higher than the industry average, what can I say". Nice little skim job each month. So I don't see how the % of total units shipped number is any better for MSFT than one based on actual OS installed on units shipped number, as there are ways to keep Michael Dell honest--most of them are hands-on ways. But of course, it would be no surprise to anyone that MSFT would simply want to base the payment on some very high percentage of total units shipped, say 95% or so. Not a 100% monopoly, but close enough.