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Friday, August 25, 2006

Wall St Shorts Buy Microsoft Pitch

Someone believes that Microsoft's argument that it can get back on the growth trail. After the software giant made it big presentation about Vista and its commitment to the internet as a software delivery mechanism, short interest dropped 15 million shares to 73 million from July to mid-August.

Microsoft argument that it will see improving Xbox sales and will launch a multimedia player Zune, before the holidays, at least held out some hope that the company will not depend on its operating system and server software for virtually all of its operating income. The one legged chair syndrom has plagued the company, and its investors, for a decade.

Since mid-July, the company's shares have made a move that might give some shorts pause. The stock, which was barely above $22, has moved above $26. A move of 18% on a company with Microsoft's $259 billion market cap is an achievement indeed.

If the company can continue to convince investors that the new Vista operating system can launch byearly 2007 and that one or more of its other initiatives (Xbox, MSN, the new Zune player) will do something other than suck down operating income, Microsoft's shares may just run a little more.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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