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Technology Stocks : C-Cube -- Ignore unavailable to you. Want to Upgrade?

To: BillyG who wrote (40575)	5/6/1999 9:07:00 AM
From: Maya	Read Replies (1) \| Respond to of 50808

ATT - Microsoft agreement is non-exclusive meaning Java based set-tops are still a possibility: Microsoft, Ma Bell strike cable deal Software king to invest $5 billion; deal may pressure Sun By Brenon Daly, CBS MarketWatch Last Update: 8:51 AM ET May 6, 1999 Tech Report NEW YORK (CBS.MW) -- Microsoft and AT&T agreed to team up Thursday to promote the rollout of advanced electronic services such as high-speed Internet and interactive television. Under the deal, Microsoft will purchase $5 billion in convertible AT&T debt, which can later be translated into 102.5 million Ma Bell shares. In return, AT&T has agreed to boost its use of Microsoft's Windows CE software for the TV settop boxes that will control the new advanced services. At present, AT&T (T: news, msgs) has licensed the right to use Microsoft's Windows CE for 5 million settop boxes. It will now license rights to use the software for an additional 2.5 million to 5 million boxes. The two companies struck the deal in the wake of AT&T's winning bid to acquire cable operator MediaOne. See related story. Analysts believe Microsoft was using the threat of backing a rival offer from Comcast to extract concessions from AT&T. Microsoft wanted to ensure that AT&T mostly relies on Windows CE, which allows Web surfing over television, instead of competing software from archrival Sun Microsystems. The new cozy relationship between Microsoft (MSFT: news, msgs) and AT&T might be bad news for Sun (SUNW: news, msgs), which offers a Java-flavored version of a set-top box operating system. Still, the AT&T deal with Microsoft is nonexclusive, meaning the phone carrier can still buy settop software from other companies. Sun representatives didn't immediately return phone calls. Shares of Sun edged up 5/8 to 57 13/16 Wednesday, while Microsoft's stock rose 1 1/16 to 79 1/8. "Thats why the possible deal with AT&T is so important -- so Microsoft will be able to deal directly with AT&T and have them choose (Windows CE)," said Sharon Corbitt, spokeswoman for General Instrument (GIC: news, msgs), before the deal was announced. General Instrument is the largest maker of set-top boxes. Since these gadgets were introduced in late 1996, the company has shipped more than 3.5 million of them. General Instrument along with its chief rival Scientific-Atlanta (SFA: news, msgs) make the boxes, and then cable operators choose which software they want to power them. Windows CE, with about half as many lines of code as the better-known Windows 95 system, runs electronic gizmos such as set-top boxes, personal organizers and even small computers in cars. The operating system is viewed as crucial to the fortunes of Microsoft, as the sales rate for the gadgets is expected to vastly outstrip the 15 percent projected for PCs. Microsoft has put an increasing emphasis on CE, but its effort hasn't been a universal success. For instance, 3Com's Palm product -- the best-known personal organizer -- uses an internally developed operating system. Further, not all analysts are convinced that Microsoft can extend its monopoly in the PC market to the notorious difficult consumer electronic market. The move would also bring a new scale of economics, as CE generates only about one-tenth the revenue that its other operating systems produce, according to Forrester Research. cbs.marketwatch.com