News > Technology
Apple bailout questioned
August 8, 1997: 5:41 p.m. ET

Experts see Gates' investment as antitrust insurance policy
From Correspondent Steve Young
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NEW YORK (CNNfn) - Microsoft Corp.'s $150 million investment Tuesday in Apple Computer Inc. has given Apple stock a boost, but it also has left Silicon Valley watchers with several questions.
     It's clear that Apple co-founder Steve Jobs did the deal because the company desperately needs the cash infusion.
     However, Microsoft is such a tough competitor, a lot of people wonder why the company is now bailing out Apple.
     Rick Sherlund, technology analyst at Goldman Sachs, said the short answer to that question is why not? Sherlund said $150 million is a lot to Apple, but no big deal to the software behemoth.
     "$150 million to Microsoft is not material to their balance sheet. They have $9 billion in cash and no debt. They generate $150 million in cash about every 15 days," he said.
     Tony Perkins, publisher of The Red Herring, said by breathing some life into Apple for just $150 million, Gates buys himself an antitrust insurance policy. (203K WAV) or (203K AIFF)
     As part of the deal, Apple will more tightly integrate Microsoft's Internet Explorer Web browser, giving it a leg up on competitor Netscape Communications Corp.
     Microsoft already gets favored browser position on 90 percent of the PCs controlled by its software, so normally government antitrust lawyers would be hopping.
     But analyst say the Justice Department is not likely to go after Microsoft, since that could jeopardize Apple's attempt to survive.
     Industry insiders say Microsoft made the Apple investment to keep Windows from becoming irrelevant. That could happen if Sun Microsystems Corp.'s Java software becomes the most popular Internet software building block.
     Sun President and Chief Executive Officer Scott McNealy said Apple's operating system is already irrelevant.
     "There's Java and there's Windows. Those are the only two that are going to survive, those are the only two that matter and the only two that have volume and critical mass," he said.
     Experts also say the Apple deal could help Microsoft stop Sun from drawing the curtains on the Java standard.Back to top


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