At Nextel, MCI's out and MS is in...

Rohit Khare (
Mon, 10 May 1999 12:19:35 -0700

[This is the WSJ's take on the deal;'s facts are attached,
too. For any of you interested in ancient history, this is
reminiscent of the old browser wars -- Nextel was allied with
Netcenter in an intial announcement three months ago. On the
financial level, MS appears to have made out well -- not quite the
premium valuation that MCI was talking about. And most of all, they
get cash on the barrelhead to develop this stuff -- MCI Worldcom
wants operating profit, and isn't known to take the kind of
technology risks these wireless internet ventures bet on. Don't get
me wrong -- MCI is very willing to put money into deploying new
technologies that represent *market* risk ("will people want
nationwide OC-48 IP?" a few years ago) but less on *technological*
risk (WAP or Java or HTML or whatever bleeding-edges it takes to do
handset-browsing). -- RK]

Microsoft to Take Nextel Stake As Firms Set Internet Venture

Microsoft Corp. agreed to invest $600 million in Nextel
Communications Inc., taking a roughly 5% stake in the company, and
agreed to form a joint version of its MSN portal site to offer
wireless Internet services.

Nextel, based in Reston, Va., said Monday that it will sell about
16.67 million shares to Microsoft for $36 a share, just below the
stock's market price of $36.375 at the close of trading Friday on the
Nasdaq Stock Market. The stock jumped $1.25 Friday amid a rally in
many technology-related issues.

Microsoft and Nextel plan a wireless portal to work with hand-held
communications devices, cellular phones and interactive pagers.
Nextel's customers will be able to access e-mail, calendar and
address book services, news and financial information and other
content from MSN, the companies said.

The agreement with Microsoft comes just days after Nextel and MCI
WorldCom Inc. broke off merger talks. The two companies were unable
to come to terms on a price for the deal. MCI WorldCom was willing to
pay $42.50 a share, but Nextel asked for $44.20 a share, people
familiar with the matter said last week.

"The combination of Nextel's integrated data network and
Internet-ready phones will provide our customers with the ability to
access information and applications that are important to them,
wherever they are," Dan Akerson, Nextel's chairman and chief
executive officer, said.

Nextel plans to use the $600 million investment to advance deployment
of the MSN services, develop additional digital services, expand the
Nextel National Network in the U.S., and fund system development and
expansion, the company said.

The companies said the wireless portal services are expected to be
available later this year.

Microsoft, Nextel in $600 million deal
By Melanie Austria Farmer
Staff Writer, CNET
May 10, 1999, 6:45 a.m. PT

update Microsoft today said it will take a stake in Nextel
Communications and announced plans for a new wireless portal via its
MSN network of Internet services.

The software giant said in a statement that it will buy $600 million
worth of Nextel's common stock under the wireless deal where Nextel
will be Microsoft's first provider for its new wireless portal.

Microsoft said that through Nextel the two companies will offer a
cobranded wireless portal for Nextel's 3.15 million customers.
Through the new portal, Nextel customers will be able to access their
email, address books, calendar, news, financial information, and
other Web-based content from MSN via their Nextel phones, Microsoft

The wireless portal is designed to work with handheld devices,
cellular phones, and interactive pagers via its MSN network of Web
services, and users will be able to access their online information
from wherever and whenever they want through the wireless MSN portal,
the Redmond, Washington-based company said.

For example, Microsoft said that more than 40 million users of MSN
Hotmail will shortly be able to access their email, use their online
address books through their cell phones, and track news and weather.

In addition, the company said that in the near future its wireless
portal services will include e-commerce offerings, which the user
could take advantage of via their cell phone or handheld wireless PC.

"This is a significant step toward simplifying people's access to
valuable online tools and information where and when it's most
convenient to them," Microsoft consumer and commerce vice president
Brad Chase said in a statement.

The wireless MSN portal will be accessible by devices using
microbrowser technology, such as Pocket Internet Explorer for the
Windows CE operating system and wireless Internet access. Microsoft
said that on top of working with Nextel, it plans to build
relationships with other leading wireless carriers to promote its new
wireless strategy.

The wireless portal will be available later this year in conjunction
with the next major upgrade of the MSN portal, Microsoft said.