Microsoft Corp. Harvard Case Solution & Analysis

In the spring of 1999, Martha Fontanez, new analyst growth capital required to make recommendations to the Board on the investment value of shares of Microsoft. She was associated with the announcement of the company between 1997 and 1999. In the quarter ended June 30, 1997, Microsoft announced that it would not buy back any shares, because its action "the price was too high." Not only shares Microsoft, a fall in prices on the news, but the Dow Jones collapsed 130 points. In the following corporate releases, Microsoft CEO Steve Ballmer repeatedly warned investors of the risks inherent in Microsoft stock and the possibility that the security has been re-evaluated in 1998 and 1999. Microsoft publicly talk down the stock, buying fewer shares on the open market than ever before, and are experiencing severe levels of insider selling. Fontanez was also associated with firm value in the aftermath of the issuance of options, and wondered whether the market was not accurately calculate their value. It is necessary to determine whether these actions reflected Microsoft insiders excellent information about the cost of the company - and, thus, would not be possible correction in stock prices - or the stock price will continue to rise. Fontanez wondered whether Ballmer was right that Microsoft has become too expensive to buy. Was Microsoft, finally, at a loss how to invest their profits? Or was the action a good buy? "Hide
by Mary E. Barth, Carlos Schoenfeld Source: Stanford Graduate School of Business 16 pages. Publication Date: April 1, 2000. Prod. #: A174-PDF-ENG

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