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 [email protected].

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