Patrick Lannigan - Spring 2003
The Microsoft Prospectus (S1) should be required reading for every software executive. Think Microsoft knew exactly how things would unfold? Think again. They hedged all over the place. Xenix operating system, Xenix applications, Multiplan for TRS-80, Multiplan for Wang PC, etc.. Hedge hedge hedge.
Don't get confused by their offering price of $21 per share as compared to their recent (July 2003) price of $25. Microsoft's eight splits (some two-for-ones, some three-for-twos) means that their effective share price in 1986 was 15 cents a share. Hmmm - let's see - 15 cents a share in 1986, $25 in June 2003. Get out the calculator.
The Microsoft prospectus was not without controversy. The IRS was threatening to charge Microsoft a $30,000,000 personal holding company (PHC) tax. (PHC tax is intended to prevent individuals from setting up a corporation simply to avoid taxes.) Another more interesting threat was a lawsuit by Seattle Computer Products (this was the company that Microsoft bought DOS from, for $50,000).
Read the prospectus. Think Microsoft had it all figured out? No way. Their success is due more to how they reacted to their failures, than to their success.
The prospectus, in MS-Word format, is here:
(right click "Save As" to save this MS-Word doc on your PC.)
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©Patrick Lannigan
patrick at lannigan dot org
