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Originally published March 9, 2009 at 12:00 AM | Page modified March 9, 2009 at 9:13 AM


Brier Dudley

Microsoft stock brings back that old feeling

There's a bright side to Microsoft's recent stock price: It's making me feel at least 10 years younger.

Seattle Times staff columnist


There's a bright side to Microsoft's recent stock price: It's making me feel at least 10 years younger.

Seattle's sugar-daddy stock is back to where it was in 1997.

Last week, it fell to $15 — even touching $14 for a time on Friday.

Of course, Microsoft isn't alone. Most every big-company stock is in the toilet.

But MSFT isn't just another stock around here.

In the 1990s, the stock did for Seattle what the spice trade did for Venice in the Middle Ages. It underwrote stadiums, museums and mansions on every lake and Puget Sound inlet.

The stock helped lure tens of thousands of people from around the world to Seattle and made many of their friends and relatives rich. At least those who sold at the right time.

"It's been such a huge ride for so long, so many people own significant amounts of the stock, it clearly is kind of the dominant stock," said Jim Margard, chief investment officer of Rainier Investment Management in Seattle, where he's been since 1985.

"When people in this area think about the market, I'm sure that by far most of their thoughts go straight to Microsoft."

Although it's been a loser lately, the stock's still been good for those who got aboard early.

Margard noted Microsoft's "only very slightly lagged the overall market" over the past decade.

Over 15 years, it returned 344 percent, excluding dividends, compared with 105 percent for the overall tech sector.

The short term isn't so nice. Year-to-date, Microsoft is down 21 percent, compared with 11 percent for the sector, but Microsoft's still beaten the S&P 500 by about 3 percent, Margard said.

What else has changed since Microsoft first reached $15, adjusting for stock splits, in early 1997?

At the time, Microsoft was still trying to get its Windows NT business product rolling. Netscape was dominant and Microsoft was talking up Internet Explorer 4.0.

Most PCs had 28.8 kilobit-per-second modems and Ted Turner was teasing Bill Gates for not doing more philanthropy.

Although Microsoft stock was on a streak that would continue for several more years, it wasn't all roses.

Later in 1997, the federal antitrust suit began in earnest while executives in Redmond fought bitterly over Internet strategy.

Defenders of the PC franchise prevailed, Microsoft missed a few big online opportunities and the stock never really recovered after 2001.

But it's more fun to look ahead and wonder whether the correction positioned Microsoft stock for another surge, or simply reflects the poor outlook for software in the next year or two.

In other words, does a $15 stock price mean Microsoft's facing a new runway or a cliff?

Lately, CEO Steve Ballmer and Craig Mundie, chief research and strategy officer, have tried making the case that we're on the cusp of another computing revolution.

They say Microsoft will benefit from the arrival of PCs and handheld devices with 100 times more power, all connected and synchronized by new online services.

We'll have to see if Microsoft's the next Microsoft.

First it has to get Windows 7 out the door, without losing the momentum and respect that the new operating system has already won from Microsoft critics.

That product alone should get the stock back in play, said Brendan Barnicle, analyst at Pacific Crest Securities in Portland.

"Windows 7 is certainly promising enough that it can move back to $20," he said.

Barnicle expects the stock to hit $28 within a year. He's on the high end; on average, analysts expect $22. They're pointing the time machine back to last fall.

Ballmer and Mundie, seeing big opportunities around the corner, seem to be suggesting 1997 is a better target. Maybe they're ready for a do-over.

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or

Copyright © 2009 The Seattle Times Company

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Brier Dudley offers a critical look at technology and business issues affecting the Northwest. | 206-515-5687

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