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To: KevinMark who wrote (117884)	12/1/2000 4:50:59 PM
From: Lane Hall-Witt	Respond to of 120523

KM -- MSFT: I'll think about that; I need to read the 10Q to see how exactly they account for investments, and to see if they do any hedging to offset changes in paper value. MSFT has some of the smartest accountants and financial managers you'll find, so I suspect the damage from their portfolio won't be as bad as you'd think. But I obviously could be wrong on this since I haven't really studied their method for juggling these numbers. That's for later, though -- time now to turn off the TV, shut down the computer, and take the dog for a walk. Good weekend to all!

To: KevinMark who wrote (117884)	12/1/2000 4:54:21 PM
From: rocklobster	Read Replies (1) \| Respond to of 120523

MSFT has been well know to sell covered calls on its investments as well as on its reserves of its own stock.. so while they may not benefit from shorting, they are unlikely to feel as much pain as one might expect on their investments.. You have to figure they have some pretty savvy people managing their investments.. I don't have a link to this information but read it somewhere that they do a lot of call writing rok

To: KevinMark who wrote (117884)	12/4/2000 8:31:25 AM
From: Lane Hall-Witt	Read Replies (1) \| Respond to of 120523

KM -- MSFT: I've only taken a quick look at the prior 10-Q, but here are a few facts related to its investment income: (1) In 1Q2001, investment income was $1.127 billion; net pre-tax income was $3.852 billion; net income after taxes but before an accounting change was $2.581 billion; net income after taxes and accounting change (new accounting methodology for derivatives) was $2.206 billion. (2) Investment income included dividends ($97 million), interest ($431 million), and recognized net gains on investments ($599 million). (3) The form of investment income we're interested in is recognized net gains (or losses) on investments. This is income recognized when MSFT sells (or writes off, I assume) investments. This means fluctuations in the paper value of investments would not immediately affect the bottom line. In fact, MSFT could still record investment gains, even in this down market, by selling investments at a profit. (4) MSFT purchases derivatives to hedge against security risk, currency risk, and interest-rate risk.