The book Pride Before the Fall written by John Heilemann, HarperCollins Publishers, NY, 2001 is about the Microsoft trial. A company the size and profitability of Microsoft has lots of lawsuits, but invariably as Microsoft dominated the software industry there would be those that wanted Microsoft to have less power. Microsoft lead by Bill Gates figured out the software was the place a company wanted to be and with the leading company of the day – IBM agreed to allow Microsoft to supply the software for their machines. As IBM was the leading company of the day, corporate America embraced IBM and with them, Microsoft and they were on their way to influence. As time shifted from large machines to desktop then to laptops now Smartphones and all sorts of combinations Microsoft has been a market leader. They rarely start a market, but quickly lead how to monetize and become a leader in the field. As Microsoft grew, when the next big thing was access to the internet and which browser would you want? Netscape was the first company to have a browser, and by all accounts Microsoft threw its weight around and eventually was told about it in court. The book is about the trial, the attitude Microsoft took into the trail is very common. The company has been very successful, they employed many smart people and the culture of the company showed that, in the case of the trial, their attitude toward the government was they were not as smart as us, otherwise they would be in private industry. People forgot the government employs good people who have long timelines, in private industry the timelines are get in done and move on to the next task. The government can look, listen, and wait until all the stars align for the people not working for Microsoft will release information which leads to Microsoft bending the law. Most large companies stay large because they go after the smaller companies to maintain and slightly grow their market share. To maintain and grow, because large companies have resources to allocate to projects, they can and do outspend the competition – 98% of the time it works.

Linking to dividend paying stocks, the book while about Microsoft goes on about the length of time and energy the senior people in the company devote to the trial. When the government comes knocking, priorities change. Within the trial and lead up to it, most of the time, the government wants a politically correct solution. The government does not want the company to be out of business, unless they are rotten to the core, but it does want something. The trick is to find what is acceptable and give it to them early without admitting error. Whether that something is money, some scapegoats or people (that usually leave with their pockets lined) or a form of reorganization it is important to find out what that is and do it sooner than later. Trials take a great deal of effort and resources and often times it is better to exit the stock during the trial, wait till the trial is over and buyback the stock. Attitude plays a great deal, in the book Microsoft’s pride was the reason they lost, although for many months they could not see the other side point of view, they felt they were correct and everyone else was wrong, it had worked before.

There are more questions than answers, till the next time – to raising questions