High-tech companies battle over the value of donated software; Microsoft gives 'millions' to charity, but critics question the true cost; 'junk bonds of philanthropy.' (IBM challenges Microsoft) (Company Business and Marketing)

Article Abstract:

Questions are arising over the actual value of products donated by technology giants. An example is the recent dispute between Microsoft and IBM over 1996 total contributions. Microsoft led all corporations with $73.2 million, according to Corporate Giving Watch's year-end issue. IBM, which claimed that Microsoft based most of its total on retail software prices, later recalculated its 1996 total from $72.2 million to $92.7 million. Donations benefit recipients while enabling corporations to boost their public relations profiles. Tax deductions are indexed by the Internal Revenue Service, but at issue is how companies determine the donated products' manufacturing costs. Price discrepancies exist not only between software's suggested retail price and average retail price, but also the manufacturing costs. Charity discount of up to 70% can further complicate the totals. Lotus Director of Philanthropy Michael Durney says price assigning of donations is not illegal, but companies face ethical issues.

Donations, Corporations, Company public relations

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Microsoft emphasizes its role as a partner at Comdex; a legion of allies is eager to demonstrate its loyalty to the software giant

Article Abstract:

Microsoft is emphasizing its partner and mentor role with hundreds of other independent software companies at the current Comdex trade show in Las Vegas. A range of almost 300 firms are pledging loyalty to Microsoft at its 11,000-sq-ft Microsoft Partner Pavilion. Microsoft attributes part of its market share to attracting a large number of partners, who create software for its products. The software giant invests nearly $600 million annually in providing numerous services to so-called third-party investors. Another strategy, unveiled in 1996, consists of hosting more than 2,000 worldwide seminars that deliver specialized software and services for Microsoft products, which include Windows NT, Exchange e-mail and SQL Server database software. Microsoft hopes the outreach programs can reverse its reputation as a predator that integrates software features into its dominant Windows OS. Some small companies that operate in specialized niches do not fear Microsoft as a hostile competitor.

Planning, Marketing, Company marketing practices, Company business planning

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Microsoft and its two constituencies

Article Abstract:

Microsoft acknowledges that modern companies are making financial innovations to attract skilled employees with stock options. The company has advised its 21,000 option-holding employees and investors that they are vying for the same prize. Microsoft earned $3.45 billion in the 1997 fiscal year ended Jun 30, including $744 million from selling 47 million shares to employees at far-below market prices. It then paid $3.1 billion to repurchase 37 million shares on the open market, in a move to prevent its share numbers from becoming excessive. Employees, as of Sep 30, 1997, still had the option to buy 258 million shares of Microsoft stock at $42. Company stock sold for more than $142 each in early Nov 1997. CFO and option-holder Greg Maffei said the company must spend $26 billion to retire those shares.

Management, Column, Securities, Employee benefits, Company securities

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