Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : MSFT Internet Explorer vs. NSCP Navigator -- Ignore unavailable to you. Want to Upgrade?

To: Harvey Allen who wrote (23997)	6/8/2000 12:21:00 AM
From: Gerald R. Lampton	Read Replies (1) \| Respond to of 24154

Harvey: A good post to an excellent "value added" article. What I find sort of interesting is that (a) the judge agreed to do the interview in the first place, and (b) his open admission of the extent to which his expertise is limited and that he had to rely on DOJ experts and rubberstamp the DOJ proposal as a result. Some commentary on the investment ramifications of today's decision: Microsoft investors face split decision news.cnet.com "We would expect all key management to go with the applications company, given that the operating systems business as configured by the DOJ would effectively be neutered, stripped of nearly all exciting opportunities to expand the market," Rick Sherlund, a closely followed analyst with Goldman Sachs, wrote in a recent research paper. and this: Melissa Eisenstat, a CIBC World Markets analyst and one of two Wall Street soothsayers with a "hold" recommendation on the current company, favors Microsoft's Internet and applications operations that would be run by the new company. Based on projected price and earnings ratios, as well as cash and equity investments, she estimates that the Internet business would grow 100 percent annually over the next several years and that the applications operation would rise 15 percent. By contrast, the total growth of the operating systems company would grow an estimated 20 percent. "We are liberal in our Internet and consumer growth rates because the market has been placing a liberal premium on Internet plays," Eisenstat wrote in a report released in April. The applications and Internet company would have a stock price of $40.16 for calendar 2000, with an estimated earnings per share of $1.05, according to her research. The operating systems company, meanwhile, would have a stock price of $17.70, with an estimated 73 cents earnings per share. That comes to a total value of $57.86, vs. today's price of ~$70, unless of course internet valuations crash, in which case the value would be lower. It's also worth noting that the exercise price of the options they just issued is ~$66, which means they'd be worthless, at least in the short run, if the breakup survived the appeals. Not a pretty picture if you believe the analysts, especially if you bought into the hype on this stock at $119 a few months ago. But, you might ask, where are all the analysts who thought the company would be worth more after a breakup? Why aren't we hearing whoops of joy from them? A good question.

To: Harvey Allen who wrote (23997)	6/10/2000 4:30:00 PM
From: Gerald R. Lampton	Read Replies (2) \| Respond to of 24154

Here's another post to the judge's WSJ interview article: zdnet.com One thing that is interesting is how everything this judge has said in public has been designed in some way or other to bolster his decision. Three of his comments that really stick out are: 1. It was a credibility contest. Credibility contests are hard to overturn on appeal. 2. He wanted the parties to settle and only imposed a breakup after they didn't and after Microsoft proved itself untrustworthy in and out of court. This is obviously designed to deflect criticism that the decision was extreme. 3. He's a conservative Republican. Again, designed to deflect criticism. 4. He refers to statements by Gates and Ballmer that Microsoft did nothing wrong and evidence, much of it not introduced into the record, that Microsoft continues to do business as before. This is the same judge who, back during the Consent Decree case, performed an out of court demonstration of the Windows uninstall function to show how easy it was to remove the browser. I guess Microsoft became untrustworthy from that point forward, and everything else they said and did during the trial just added to that initial impression. If I were Joel Klein, I would not be smiling.