RealTime IT News

Spitting in the Wind

Microsoft's new skipper was in Atlanta recently preaching to the Technology Association's bully pulpit. Steve Ballmer made a calculated statement that he believes, "Even with the collapse in the dot-com marketplace, you still have a lot of people who are overinvesting in dot-com start-ups." He added, "There's too much money chasing Internet ideas today."

First off, people need to understand that Softie's top banana never makes an offhanded comment like that without an ulterior motive. In this case, Ballmer's trying to sow the seeds of discontent within the investment community, in hopes that those dot-com start-ups will be forced to walk the plank by grumpy investors.

Don't forget, Microsoft is embroiled in its latest legal migraine, stemming in large part from its anticompetitive practices against those same "two guys in a garage" upstarts. The software giant has without a doubt, enjoyed the latest meltdown in Internet stocks more than any other company on the planet. The cash-wealthy Microsoft will try to further promote the idea that less money should be thrown at dot-newcomers, because with fewer new faces in the crowd, you'll hear a collective sigh of relief out of Redmond.

Another key concern for Microsoft execs is that with overnight ballooning market caps in younger, sexier new economy stocks, start-up war chests are quickly loaded with lucrative currency. A bulging wallet with plenty of upside potential gives companies an easier time attracting top talent and making blue chip acquisitions that could potentially turn into a Microsoft rival in the future.

But the knife cuts both ways. The latest market famine has illustrated just how quickly the winds of fortune can change a newcomer's outlook. So, what you have in Ballmer's latest spin-doctoring is a thinly veiled attempt to pile on to a sector that has already had the rug pulled out from under it. Bankruptcy proceedings, nixed merger deals, pink slips, and going-out-of-business sales - it's all music to Microsoft's ears.

Steve Ballmer has a storied history of delivering sound bites in an effort to drive down Internet stock valuations. This time last year, he spoke to business writers in Seattle, telling the group, "There is such an overvaluation of technology stocks, it's absurd." An overheated market responded swiftly to his comments, as the Nasdaq tumbled nearly 4%. Of course, not long after, the up-and-coming Nasdaq went on to give the Big Board a run for its money, topping 5,000 before sheriff Greenspan pulled investors over for speeding.

This time around, the comments come at a time when select stocks are showing signs of turning the corner. Although many new issues are still off 80% or more from their 52-week highs, investor sentiment appears to be steadily improving. Unlike last year's timely foretelling, Ballmer's latest is more likely to serve as a contrarian indicator amidst healthy quarterly earnings from Wall Street's tech stock elite and retail investors anxious for a good old fashioned rally.

Any questions or comments, love letters or hate mail? As always, feel free to forward them to kblack@internet.com.

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