<THE RULE MAKER PORTFOLIO>

Touring Microsoft

By Al Levit (TMF Early)

GLENDALE, CA (June 1, 1999) -- This week will be one of exploration in the MakerPort, as we tour a different company home page each day. As many of you probably know, combing through a company's site is one of the greatest ways to gain a solid understanding of its business.

At the minimum, most corporate websites provide press releases, product information, and SEC filings. In addition, many companies go above and beyond the call of duty to make their websites educational and accessible (and even fun!) to someone who knows nothing about their business. Within this portfolio, many of our companies have websites that feature webcasts of the annual shareholder meeting, transcripts of executive speeches, extensive company background information, and a plethora of financial information.

Today, I'm going to step through Microsoft's (Nasdaq: MSFT) home page, which is located appropriately enough at www.microsoft.com. (Tip: We're going to be looking at quite a few links in this column, so you may want to open another window to follow along.) Microsoft has a truly immense site. It's so big that Tom, Phil, Matt, Oak, and I could spend the entire week exploring everything that is in there, and we still probably wouldn't be done. Nevertheless, I'll try to focus on a handful of pages that are most relevant to Rule-Making investors.

In particular, I'm going to focus on the Investor Relations site, which can be accessed directly at www.microsoft.com/msft, or from Microsoft's homepage by clicking on "About Microsoft," and then "Investor Relations." Chock full of excellent information, this is one of the best investor relations sites out there. In fact, Microsoft notes that it has received high praise from both Investor Relations Magazine and even The Motley Fool (see special on Investor Rights).

Front and center on the investor relations main page is a tool that calculates how much money you would have made if you had invested in Microsoft at its initial public offering (IPO) in March of 1986. I'll save you some time (although I can't help you with the tears!) -- an initial $100 investment is now worth $46,477, based on last Friday's closing price of $80.69. Simply incredible -- this company has created an amazing amount of shareholder value in a relatively short period of time.

Moving to the next link, in case you couldn't make it to the TechEd conference in Dallas last week, Microsoft provides a summary of Senior Vice President Bob Muglia's speech, in which he details four new initiative to achieve "Bill Gates' vision of knowledge workers without limits."

After that, there is an update on the anti-trust trial with the United Stated Department of Justice (DOJ), including links to trial news, court transcripts, and a full chronology of the trial. Also interesting is the advice from Microsoft about how shareholders "can become involved in Microsoft's defense of the freedom to innovate." Even TMF Oak may be interested in this section, since the first recommendation is to "Tell us your opinion." You can even give Microsoft permission to publicize your message. Oak, I'm certain Microsoft will find your opinions useful and be anxious to publish them :).

On the left side of the investor relations main page, the top link is for the multimedia annual report (from June 30, 1998), a dynamic document that provides more depth than the printed version. Here, you can read Bill's letter to shareholders in any of 12 languages or watch a four minute video presentation of thoughts from various Microsoft customers.

Moving down the links on the left side of the investor relations page, there's a wealth of financial information. The earnings page provides a history of previous earnings releases and a schedule of tentative dates for upcoming releases. The stock information page includes a record of all previous stock splits along with a very educational list of frequently asked questions (FAQ) about splits. In reading this FAQ, I learned quite a few interesting facts about splits for all companies, not just Microsoft.

History buffs will appreciate the financial history page, which provides quarterly income statements since 1985, as well as a variety of charts and graphs. Using the trailing 12-month income statement Excel sheet, I discovered that Microsoft only surpassed the $1 billion annual sales mark in 1990, yet is now the world's most valuable company. Amazing.

Microsoft provides several Excel-based analysis tools for studying financial trends. Several of these tools are in the form of "PivotTables," which summarize, or cross-tabulate, large quantities of information. Using these PivotTables, you can very easily study income statement line items since 1985 or revenue by sales channel and product group. One of the most interesting tools is the FY 1999 "What If" Model, which allows you to forecast the 1999 income statement by making a few simple assumptions such as revenue growth. Very cool. By the way, all of these tools are available in Excel format, but Excel is not needed to use them. An Excel 97 viewer may be downloaded for free from the site.

Next, there is a history of press releases documenting the company's investments and acquisitions. Much has been going on in this area recently with four major investments (CareerBuilder, WebMD, Nextel, and AT&T) during the month of May alone.

The speeches+articles page is an archive of the transcripts of executive speeches. While executive speech transcripts may sound as exciting as a slide show of your in-laws' vacation, these documents are one of the best ways to become familiar with what's happening inside Microsoft. For example, Vice President Brad Chase's keynote address on March 10 gave a number of interesting facts and figures regarding the company's progress on the next versions of Office and Windows, as well as the status of Windows CE and Microsoft's Web properties.

Finally, Microsoft provides links to SEC filings, press releases, and corporate information. I could write a whole column just about the corporate information pages, which include:

Before leaving the Microsoft site entirely, let me make a couple of comments about the site outside of the financial area. First, Mr. Softy has two new blockbuster applications that will be released soon, and it is giving them prominent mention on the home page. There is a conspicuous link posted to let the user pre-order a copy of Office 2000, which according to Microsoft's third quarter earning release will be available on June 10. In most cases, a smaller but still very visible link allows the user to get a copy of the third beta release of Windows 2000.

I say "in most cases" because one very interesting thing about the Microsoft home page is that it can be customized. In the default position, links are shown to Office 2000, Windows 2000, Demolition Golf, and Vizact 2000 (a program to create active documents). When I changed the setting to "Home User," the links for Office 2000 and Demolition Golf remained, but Windows 2000 and Vizact 2000 were replaced with more consumer-oriented material. In addition, the page now had all kinds of information about games and other activities available from the Microsoft Network (MSN).

The Microsoft home page has six possible settings ("All" -- the default position, "Business," "Developer," "Education," "IT Professional," and "Home User"). Each presents its own subset of information tailored to the user. I've never seen anything quite like this on a home page, but it seems like a terrific way to get a user to the right place quickly in a site as vast as Microsoft's.

Fool on,

Al

06/01/99 Close

Stock Change    Bid
AXP   -2 7/8    118.19
CHV   -2 1/16    90.44
CSCO  -1 15/16  107.06
EK    -  1/2     67.13
GM    +1 11/16   70.69
GPS   +2 1/4     64.81
INTC  -3 3/8     50.69
KO    +  3/4     69.25
MSFT  -2 3/16    78.50
PFE   -  5/8    106.38
SGP     ---      45.06
TROW  -  1/4     38.38
XON   -1 1/8     78.75
YHOO  -9 13/16  138.19

                  Day     Month  Year    History
        R-MAKER  -1.40%  -1.40%   3.23%  30.63%
        S&P:     -0.58%  -0.58%   5.61%  30.67%
        NASDAQ:  -2.37%  -2.37%  10.00%  45.93%

Rule Maker Stocks

    Rec'd    #  Security     In At       Now    Change
    2/3/98   48 Microsoft     39.13     78.50   100.59%
    5/1/98   55 Gap Inc.      34.37     64.81    88.57%
   6/23/98   34 Cisco Syst    58.41    107.06    83.29%
    2/3/98   22 Pfizer        82.30    106.38    29.25%
   2/13/98   44 Intel         42.34     50.69    19.72%
    2/6/98   56 T. Rowe Pr    33.67     38.38    13.96%
   5/26/98   18 AmExpress    104.07    118.19    13.57%
   2/17/99   16 Yahoo Inc.   126.31    138.19     9.40%
   2/27/98   27 Coca-Cola     69.11     69.25     0.21%
   8/21/98   44 Schering-P    47.99     45.06    -6.11%

Foolish Four Stocks

    Rec'd    #  Security     In At     Value    Change
   3/12/98   20 Exxon         64.34     78.75    22.41%
   3/12/98   15 Chevron       83.34     90.44     8.51%
   3/12/98   20 Eastman Ko    63.15     67.13     6.30%
   3/12/98   17 General Mo    72.41     70.69    -2.37%

Rule Maker Stocks

    Rec'd    #  Security     In At     Value    Change
    2/3/98   48 Microsoft   1878.45   3768.00  $1889.55
    5/1/98   55 Gap Inc.    1890.33   3564.69  $1674.36
   6/23/98   34 Cisco Syst  1985.95   3640.13  $1654.18
    2/3/98   22 Pfizer      1810.58   2340.25   $529.67
   2/13/98   44 Intel       1862.83   2230.25   $367.42
    2/6/98   56 T. Rowe Pr  1885.70   2149.00   $263.30
   5/26/98   18 AmExpress   1873.20   2127.38   $254.18
   2/17/99   16 Yahoo Inc.  2020.95   2211.00   $190.05
   2/27/98   27 Coca-Cola   1865.89   1869.75     $3.86
   8/21/98   44 Schering-P   2111.7   1982.75  -$128.95

Foolish Four Stocks

    Rec'd    #  Security     In At     Value    Change
   3/12/98   20 Exxon       1286.70   1575.00   $288.30
   3/12/98   15 Chevron     1250.14   1356.56   $106.42
   3/12/98   20 Eastman Ko  1262.95   1342.50    $79.55
   3/12/98   17 General Mo  1230.89   1201.69   -$29.20

                              CASH     $70.09
                             TOTAL  $31429.03

Note: The Rule Maker Portfolio began with $20,000 on February 2, 1998, and it adds $2,000 in cash (which is soon invested in stocks) every six months.

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