FRAMINGHAM (02/18/2000) - There's nothing like a glitzy product launch to boost a company's stock price - but history shows Microsoft Corp. lucked out this time.
Although past operating system launches seemed coincided with dips in Microsoft [Nasdaq:MSFT] stock, this week's Windows 2000 debut was a different story.
Microsoft shares closed at $99.63 Thursday, up $2 from a closing price of $97.63 the day before.
Contrast that with the small but surprising drops when Windows 95 and 98 were launched. Thursday's official debut of Windows 2000 at a party in San Francisco was no exception.
Such drops aren't necessarily unusual, said Thomas O'Keefe, a researcher at First Call Corp. in Boston. "A lot of times you buy in anticipation and then sell on that day," he said, which can cause the stock price to fall even as the company reports happy news.
For example, the day Windows 95 shipped to much fanfare - retailers such as CompUSA Inc. held "midnight madness" sales for people who couldn't wait for morning to buy the product - Microsoft shares dipped 1%.
Microsoft didn't get a break when it shipped Windows 98 on May 18, 1998, either. Its stock fell 4% that day, which happened to be the same day the U.S.
Department of Justice and 20 states filed an antitrust lawsuit against the company. The antitrust battle continues, with Microsoft petitioning Congress not to let the judge in the case break the company into pieces.
With Windows 2000's release, Microsoft may have done itself a favor by holding a press conference early this week to talk about what a bargain the software will be and how it has a lower cost of ownership than rivals'. CIBC Oppenheimer World Markets Corp., a brokerage in Toronto, for example, cited the event when it reiterated this week how bullish it is on the stock.
Meanwhile, Wall Street analysts overwhelmingly recommend buying Microsoft stock. This despite the fact that John Connors, Microsoft's chief financial officer, regularly warns Wall Street not to expect gangbuster Windows 2000 right away.
Analysts anticipate Windows 2000 will help boost sales and profits to record levels in the next year. PaineWebber Inc., for example, was optimistic in a report this week: "Expectations have been set so low by management [for sales of] Windows 2000 that even if only 15% to 20% base upgrades, that will still be higher than our forecasts."