Be Inc.: Was, has been, isn't
Another sad tale of the vanquished looking for payback from Microsoft.
February 20, 2002: 6:10 p.m. ET
By Adam Lashinsky
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SAN FRANCISCO (CNN/Money) - I'd like to be in court the day Be Inc. tries to convince a jury that it used to be worth more than $1 billion and that it's Microsoft's fault that value has slipped away.
Be, for eight years a science project before it went public in 1998, went belly-up last year. It sold its intellectual property to Palm for $11 million and hung onto just one asset, of sorts: a legal claim to sue Microsoft for anti-competitive behavior.
And so the stage is set for another example of lawyers waddling up to the trough to feed off Microsoft's still rather warm carcass. The prime example, of course, is AOL Time Warner, the parent company of this Web site, which is involved in a similar bout of finger-pointing over its Netscape unit. As noted in an earlier column, it's not a good sign from a business perspective that this is how AOL hopes to make money.
As for Be, however, this is all it's got. The complaint, filed Tuesday in federal court in San Francisco, is a compelling if familiar yarn about how Microsoft keeps its enemies down. Be attempted to introduce a new operating system that worked on Intel-based PCs and could co-exist with Microsoft's Windows operating system.
Be grouses that Microsoft "closed off critical distribution channels" and is guilty of "artificially depressing" Be's IPO price. Then Be's lawyers go for the gusto: "As a direct and proximate result of Microsoft's illegal conduct, nearly the entire market value of Be as a publicly traded going concern, which once exceeded one billion dollars, has been eliminated."
Will Be really be able to convince anyone that that billion dollars in value was anything but a sham? Who's to blame for every other formerly billion-dollar market-cap company that's tumbled?
A different set of lawyers certainly understood the risks that this could happen back when Be went public in 1998. Here's how Be warned investors in its securities filings at the time: "The market for computer operating systems is intensely competitive," it wrote. "This market is dominated by one company, Microsoft Corporation, which has significantly greater brand recognition, market presence and financial, marketing and distribution resources than we do."
In Be's best year, 1999, it had $2.7 million in revenues. That year it lost $24.5 million. Today, its shares trade for 11 cents each, about a penny more than the company estimates is the value of the proceeds it might receive "over time" from selling off its assets. Of course, if you believe Be will collect big from Microsoft, buy its shares. After all, Be doesn't have much anymore. But it does have lawyers.
Send e-mail to Adam at adam_lashinsky@timeinc.com.
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