6th > September > 1998 Archive

The Register breaking news

Markets: Asian phenomenon not new

Investors often forget that technology stocks are more volatile than general large capitalisation stocks. In fact, looking at the Pacific Exchange's technology index, there is a slump just about every year -- there have been 12 of more than 12 per cent since 1986, with the worst being 45 per cent in 1987 and 35 per cent in 1990. On the charts, the recent decline looks similar to that of October last year, after which prices remained in the doldrums for three months before going up again. From early July, the gnomes of New York have had unreasonable expectations, with the consequence that Autodesk, Computer Associates, Excite, Intuit, and Tektronix for example have dropped around 40 to 60 per cent. There have also been some big gainers like Amazon, AOL, Apple, Cisco, Dell, Lucent, Microsoft, and Yahoo since January, although even some of these dived in August. Harking back to Microsoft's analysts' meeting in July, we heard CFO Greg Maffei give the usual annual warning that with a market cap of $316 million fully diluted there wasn't much upside. As usual, hardly any of the financial analysts believed him and Microsoft ended the day at 113 that day. On Friday, Microsoft closed at just over 96. In the last two months, Microsoft passed the market cap of GE, and exceeded IBM's software sales, making it truly the biggest software company in the world. The funny thing was, Microsoft is not at all keen to brag about this, what with that Department of Justice sniffing around. ®
The Register breaking news

Late rallies partly save US shares' bacon

Thanks to late rallies, the Dow finished down 42 points to 7640 on Friday, and Nasdaq was down 5 to 1566, having been down 28 earlier. Trades on Friday were down to 619 million shares, compared with 744 million on Thursday. The SOX (Philadelphia Stock Exchange Semiconductor Sector Index closed on Friday just below 200 and is now at about half of its level a year ago. However, things are not yet as bad as mid-1996 yet, when it bottomed at 160. TCI gained 2 3/8 to 36 1/8 while Sun put on 5.6 per cent to 42 11/16, following a buy rating from JP Morgan Securities; Cambridge Tech Partners lost 7 3/4 to 27 3.8 on worries about overseas earnings and a research report cutting its rating from attractive to buy. Microsoft lost 2 5/8, probably thanks to Judge Jackson's firm stand in court. On the week, Microsoft was 8 5/8 off, to 96 5/8, and Cisco was down 5 1/2. Lucent's good news about equipment contracts was ignored by the Street, while WorldCom was marked down $1.44 to $45.94 after the UK MD said he was leaving -- and perhaps some world turbulence. KPN, the privatised Dutch PTT, fell 1 1/2 to 36 1/4 when its regulator said it had to reduce call costs around 25 per cent. PeopleSoft became neurotic about nothing very much, held a conference call with financial analysts to say everything was on target, that those worries about the slowing of new software licences were not a concern, and that the company was winning sales against SAP. PeopleSoft was then marked up 1 3/8 to 30 15/16. Symantec drank its nasty medicine after its setback in the CyberMedia case, losing 1 1/8 to 19 1/8. Evidently investors had not listened when Gordon Eubanks said that Symantec was indemnified against any loss from the suit. ®
The Register breaking news

Of girlfriends, dosses and consent decrees

The two Bills -- Gates and Neukom (Microsoft's general counsel) -- both had the same girlfriend at one time, but His Billness was first, of course. This news was revealed by Wendy Goldman Rohm in her book The Microsoft File which has, in just a few days, become the number one bestseller at amazon.com. The girlfriend is Stefanie Reichel, who spent 12 years in Germany before attending the University of Pennsylvania and emerging as a feminist. In an interview, she admitted that one of her favourite CDs was "Fumbling with ecstasy". She now works with the marketing team for the San Francisco Yacht Club's entry in the next Americas cup race in 2000. She went on to work for Microsoft in Redmond and Germany, where her job was to persuade German OEMs such as Vobis (who thought DR-DOS was a better DOS than MS-DOS, which nearly all the reviews were saying at the time) to stop pre-loading the Digital Research product. Any OEM that wanted to have some MS-DOS PCs at the time had to pay for MS-DOS even if they had DR-DOS inside -- until this was belatedly stopped by the 1994 consent decree. Microsoft's concern was of course to protect its cash cow, MS-DOS, but it became very concerned when Novell bought Digital Research with the concomitant threat of some real marketing clout. However, the FTC fumbled and the DoJ was too slow, so Novell sold DR-DOS to Caldera, which has a private antitrust action against Microsoft in the Salt Lake City district court. Its allegation is that Microsoft used a variety of illegal anti-competitive practices to spoil the market for DR-DOS. Reichel was recently deposed by Steve Hill, a lawyer acting for Caldera. He said he was unable to give any detail about her responses to questions because of a protective order that Microsoft has obtained. According to Rohm, Reichel has direct knowledge of the alleged destruction of emails between Microsoft Germany and OEMs which licensed DR DOS, which could exocet Microsoft's defence. Microsoft is now slated to meet Caldera in court in June next year, and is very unhappy that the jury trial won't be moved away from Salt Lake City, where there is considerable sympathy for Caldera which was funded initially by Ray Noorda, previously the CEO of Novell (a major employer in the state), and called by Gates "the grandfather from hell". ®
The Register breaking news

Email of Microsoft species more deadly than the mail

Three times the Department of Justice asked Microsoft to produce documents and emails. Three times Microsoft refused to comply. The cock crowed. Judge Jackson held an impromptu hearing lasting 20 minutes and gave Microsoft 24 hours to produce documents, emails, and details of meetings with Intel, Apple, and OEMs if Apple's QuickTime was discussed. A stunned Microsoft said it would comply. Microsoft's motion that the scope of the trial should be limited, or that Microsoft should be given six months to prepare its case was briefly considered by Jackson. Jackson told Microsoft that "My view of the case as raised by the complaint is not quite so narrow as yours" and decided to put off the decision on the scope to another hearing on 17 September, a week before the trial, which is still scheduled for 23 September. The Microsoft-friendly court of appeals has probably been put on standby by Microsoft if Judge Jackson does not humour Microsoft. Microsoft may have fallen into a trap set by the DoJ. It has protested that introducing additional evidence of its relationship with Apple, Intel, Sun, Bristol Technology and others would increase the scope of the present case, and that the additional lines of enquiry being followed by the DoJ would in effect create a need for a series of trials. But David Boies, the special trial counsel for the DoJ who has considerable relevant experience since he helped IBM in its epic 12-year antitrust case, told Judge Jackson that the purpose was to prove a pattern of predatory conduct. Gina Talamona, spokeswoman for the DoJ, said that it is not unusual for new information to arise during the discovery period. Meanwhile, Bristol Technologies' case against Microsoft caught the DoJ's eye. Keith Blackwell, the CEO, was interviewed by the DoJ and subpoenaed him to provide documents and a deposition. Microsoft claimed that the DoJ was on a fishing expedition. ®
The Register breaking news

Gates will not take stand at DoJ showdown

Bill Gates will not be a witness at the antitrust trial in Washington scheduled to start on 23 September -- at least not for Microsoft. He will, of course, be liable to appear for the Department of Justice in video extracts of his deposition. No doubt his PR team influenced the decision. Microsoft's PR slant for the decision, from spokesman Jim Cullinan, is that "Bill is a visionary for this company and the overall leader, but these people on our witness list were there handling the day-to-day operations". Steve Ballmer is peripheral since he is not technical. Each side will be allowed 12 witnesses. Microsoft has chosen an economist and a computer scientist from MIT; John Rose, a senior VP at Compaq, who will have a tough time explaining why Compaq is no longer upset at the threats it received from Microsoft to remove its Windows licence if it did not do what it was told about putting up Internet Explorer. Michael Devlin, president of Rational Software and a man with close business ties with Microsoft will also take the stand. There is a gang of eight from Microsoft, consisting of Paul Maritz, Jim Allchin, Joachim Kempin, Brad Chase and Cameron Myhrvold -- all Microsoft VPs -- with Yusuf Mehdi, William Poole and Daniel Rosen completing the team. They are probably being coached on how to handle it. The DoJ's witnesses include Jim Barksdale, Chairman of Netscape (who will, no doubt not agree with Rosen's version of a meeting between Microsoft and Netscape, where the DoJ alleges that Microsoft tried to do a deal with Netscape to stop it competing on the PC with its browser. David Colburn, a senior VP of AOL, who can answer questions about Microsoft browser negotiations, will also help, as will Steven McGeady, a VP of Intel, who has first hand knowledge of Microsoft's pressures on Intel in the software and content sector. William Harris is a VP of Intuit, a company that Microsoft tried to buy. Other witnesses include a user from Boeing, the president of a software company, two economists, an academic computer scientist, and a telecoms professor. ®