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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Microsoft Corporation    MSFT

MICROSOFT CORPORATION

(MSFT)
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Microsoft Corporation : Wall Street Doesn't See IPO Bar Being Lowered By Jobs Bill

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03/27/2012 | 07:19pm EST
   By Lynn Cowan 
   Of  
 

The investing public isn't going to be hit with a second wave of dot-com bombs as a result of new initial-public-offering legislation on its way to be signed by the president, Wall Street bankers and attorneys say.

The legislation, which originally was designed to make it easier for smaller companies to launch initial public offerings in part by relaxing some aspects of the 2002 Sarbanes-Oxley bill, ended up covering a much wider swath of deals by setting a $1 billion annual revenue threshold. That $1 billion level encompasses the bulk of IPOs launched in 2011, not just small offerings.

While some younger companies may take advantage of the looser restrictions, which were passed with wide bipartisan support by the U.S. House of Representatives Tuesday, bankers and attorneys who work on IPOs said they don't think the quality of companies coming public will be lowered by the legislation, which President Barack Obama is expected to sign.

"I would be stunned to see the floodgates open again like they did in the late 1990s, where premature companies that were not ready to be public came out. Investors wouldn't tolerate it," said Mark L. Lehmann, president and director of equities at JMP Securities. "What you will see is more high-quality companies accessing the market sooner."

Besides investors' resistance to buying half-baked business stories, another hurdle the legislation doesn't address for small companies that want to IPO is getting bankers and analysts interested in their stories. Even regional and boutique investment banks have gravitated away from taking small-cap companies public, according to bankers and attorneys.

"In the world today, if you're not a company that can go out and raise about $100 million, it's going to be hard to attract investment banks and research--all the things you need to launch an IPO," said attorney David Lynn, a partner and co-chair of the public companies group at Morrison and Foerster. "I don't think anything is going to change overnight; investment banks still want to be in a position where they can make decisions to take companies public that are economically rational for them."

Though critics of the bill said the looser restrictions won't do much to stimulate the creation of new jobs, which is a primary focus of the legislation, those on Wall Street disagreed.

"We are encouraged by this piece of legislation because it reduces the costs associated with accessing the public markets. If more companies are able to reach the public markets, that would have a positive impact on innovation and job creation," said Scott Cutler, head of listings in the Americas for New York Stock Exchange parent NYSE Euronext.

Attorney Alex Cohen, a former deputy general counsel at the Securities & Exchange Commission, said he believed the legislation would help stimulate jobs growth.

"Some parts of the country would be very different today if we hadn't had the kind of IPO activity" that formed companies like Microsoft Corp. (MSFT), said Cohen, who is chairman of Latham & Watkins's national office. "It's those kind of innovative startups, which became market leaders, that have shown quite a significant amount of growth in jobs creation."

-By Lynn Cowan, Dow Jones Newswires; 202-257-2740; lynn.cowan@dowjones.com

--Andrew Ackerman and Jessica Holzer contributed to this article.

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Financials (USD)
Sales 2020 140 B
EBIT 2020 49 637 M
Net income 2020 41 440 M
Finance 2020 71 780 M
Yield 2020 1,33%
P/E ratio 2020 28,2x
P/E ratio 2021 25,1x
EV / Sales2020 7,74x
EV / Sales2021 6,88x
Capitalization 1 158 B
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Number of Analysts 36
Average target price 161,29  $
Last Close Price 151,75  $
Spread / Highest target 14,7%
Spread / Average Target 6,29%
Spread / Lowest Target -1,15%
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Managers
NameTitle
Satya Nadella Chief Executive Officer & Non-Independent Director
Bradford L. Smith President & Chief Legal Officer
John Wendell Thompson Independent Chairman
Jean-Philippe Courtois President-Global Sales, Marketing & Operations
Amy E. Hood Chief Financial Officer & Executive Vice President
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