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Technology > Tech Investor
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King Microsoft
graphic November 1, 2001: 5:25 p.m. ET

With legal troubles almost behind it, the software giant is poised to keep on dominating.
By Adam Lashinksky
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San Francisco (CNNmoney) - The blaring headlines on the likely settlement with the Department of Justice don't really tell the story of why, in a world with fewer constants every day, Microsoft remains the safest harbor for the battered tech investor.

True, the software giant's legal troubles are nearing an end, and it was that news on Thursday that drove up Microsoft shares by $3.69 (or 6.35 percent) to $61.84. But Microsoft's victory has been pretty much a foregone conclusion ever since a Republican regained the White House and since an appeals court in June rebuked the federal judge who so clearly loathes Microsoft.

In fact, less glitzy headlines paint a much clearer picture of Microsoft's future and why it will continue to dominate. Consider two recent items:

* Microsoft announces that Hotmail users who don't check their accounts at least once a month will be dropped. Remember when providers of free e-mail service bragged about their number of subscribers? The rationale was that more "eyeballs" would boost advertising rates. The harsh reality is that inactive users hog server space, and Microsoft, the rational, mature, bottom-line oriented corporation that it is, understands this and is doing what's right for its business.

* InterTrust Technologies (ITRU: down $0.07 to $1.18, Research, Estimates), locked in a protracted patent battle with Microsoft over its digital-rights-management software, announces it will lay off 40 percent of its employees. After 11 years in business, InterTrust hasn't earned a dime. The company believes it has a strong case against Microsoft, which is incorporating security software into its Windows Media Player and other offerings. "We invented the rights-management and distributed-security technology that they're putting in their products," says Edmund Fish, president of MetaTrust Utility, a division of InterTrust.

Haven't we seen this movie before?

If you want a discussion of the morality, look elsewhere. The bottom line is that Microsoft is simply the strongest, most strategic technology company in the world. Maybe its P/E is a little high, at more than 30 based on projected earnings. And maybe its Xbox game-console initiative will be a flop at first.

But we're talking about a ruthless market leader with $36 billion in cash. The company whose NT server products threaten to overwhelm Sun Microsystems' Unix standard. And a software monolith that's finally figuring out the secrets of the handheld-computing business. Can you think of a better place to invest?

"They have enough initiatives out there that if one or two work they will have tremendous growth again," says Silicon Valley entrepreneur and one-time Apple Computer executive Randy Komisar, a Microsoft shareholder.

Even InterTrust's Fish, a bitter Microsoft opponent at the moment, confesses to owning Microsoft stock. "I believe in the computer industry and I believe in the future of technology," he says. And to paraphrase Louis XIV: Microsoft, at least from an investor's perspective, is the computer industry and the future of technology. graphic





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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.

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