L02 13-1 Unearned Revenues

L02 13-1 Unearned Revenues - Some Fans Cool to Microsoft:...

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Some Fans Cool to Microsoft: Citing Drop in Old Indicator Source: Wall Street Journal, 28 October 1999 Some savvy investors, detecting fissures in Micro- soft's armor, are pulling back from the world's most highly valued company. The concern: the first-ever drop in an arcane but closely watched indicator of Microsoft's future results. The balance in Microsoft's "unearned revenue" account, which declined to $4.13 billion on Sept. 30 from $4.24 billion in June, has become a lightning rod for more general concerns about the price of the company's shares. These include the expectation on the Street of a nega- tive ruling in the government's antitrust case against Microsoft, possibly as early as Friday, and a broader shift to Web-based computing, which may loosen Microsoft's hold on the loyalty of outside software developers, its most important constituency. "There are enough hairline cracks in the facade to cause me to want to reduce my exposure somewhat," said Stephen Dalton, senior vice president of First Capital Group, the institutional-investing division of First Union. Mr. Dalton said he has pared his Micro- soft position in the past month, "first tactically and then strategically." A recent selloff in the stock has knocked Microsoft from the list of his fund's 10 larg- est holdings. Commerce Bancshares' Commerce Growth Fund has also lightened its Microsoft holdings. "We're under- weighting the stock," said fund manager Eric Wynkoop. He sees the trend to free software and services on the Web pinching Microsoft profit. Says Mr. Wynkoop: "The question is: Do they represent the last generation of computing and now it's chang- ing?" Managers of several other large funds also said they are shedding part of their Microsoft holdings. The
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This note was uploaded on 05/03/2010 for the course ACCT 202 taught by Professor Yang during the Spring '10 term at UPenn.

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L02 13-1 Unearned Revenues - Some Fans Cool to Microsoft:...

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