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$14-Million Deal : Microsoft Buys Software Competitor

July 31, 1987|VICTOR F. ZONANA | Times Staff Writer

SAN FRANCISCO — Microsoft, moving to solidify its dominant position in the market for software for the popular Apple Macintosh personal computer, on Thursday acquired Forethought Inc. of Sunnyvale, Calif., for $14 million.

The acquisition is the largest in Microsoft's 12-year history. Forethought developed and markets PowerPoint, a program in the rapidly emerging area of "desktop presentations." The program allows Macintosh users to create slides, transparencies and flip charts for use in presentations.

Forethought is also the exclusive distributor for Filemaker Plus, the top-selling Macintosh database program. Database software is used to arrange lists and other files. Microsoft said it is "completing ongoing discussions" with the developers of Filemaker to transfer exclusive marketing rights to Microsoft.

Microsoft, based in Redmond, Wash., recently unseated Lotus Development as the world's largest producer of software for personal computers. Microsoft has prospered by selling the operating system for IBM personal computers and compatible machines.

That stronghold in operating system software--which controls a computer's basic functions--has financed Microsoft's push into applications software, which allows a computer to perform specific tasks such as word processing or financial calculations.

The company has been especially successful at penetrating the Macintosh market where, according to the research firm InfoCorp, Microsoft publishes the three top-selling business programs.

Analysts have long expected Microsoft to use its bulging supply of cash and its stock--which has quintupled since the company went public in March, 1986--to make acquisitions to fill out its product line.

The software industry is rapidly consolidating, and with the company's stock price so high, Microsoft Chairman William H. Gates III "has an overvalued currency at his disposal," said one investment banker who asked to remain anonymous.

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