Tuesday, June 10, 1997, page 11 ---------------------------------------------------------------------- ---------------------------------------------------------------------- Microsoft Set to Invest $1 Billion in Cable Firm Comcast Deal Expands Services Via TV ---------------------------------------------------------------------- Compiled by Our Staff From Dispatches Bloomberg, AP ---------------------------------------------------------------------- REDMOND, Washington - Microsoft Corp. said Monday it would invest $1 billion in the cable-television company Comcast Corp., a move designed to bring high-speed Internet hookups and programming to cable television customers. The move is the latest by the company's chairman, Bill Gates, to distribute Microsoft Network and other products over the Internet and television. During the past year, Microsoft has made a push into the market for combining TVs and PCs to expand the demand for its software and its Internet services, which include the MSN on-line service; MSNBC, a joint venture with General Electric Co.'s NBC TV network, which provides 24-hour news; and an Internet Web site, travel, financial and car-buying services. Microsoft agreed in April to pay $425 million for WebTV Networks Inc., which lets customers connect to the global computer network through their televisions. Microsoft is betting that it can overcome the financial and technical hurdles that have plagued Tele-Communications Inc. and other cable companies in providing high-speed Internet access. Comcast needs the cash infusion to improve its network so it can send such interactive programming to its 4.3 million customers. Terms of the deal call for Microsoft to invest $500 million in Comcast common stock and the rest in convertible preferred stock. That works out to a stake of up to 11.5 percent of Comcast. ''Microsoft's track record hasn't been spectacularly successful as a conduit of information,'' said Robert Broadwater with the investment banking firm of Veronis, Suhler & Associates. ''In the cable industry, there is no shortage of demand for money.'' Microsoft's muscle and deep pockets give it an advantage over most cash-strapped cable companies. It already has said it plans to spend $1 billion on interactive services over the next three years. Shares of Microsoft climbed $1.06 to $125.125, while Comcast gained $3.25 to $21.50. ''Microsoft wants to determine both the PC and the TV markets,'' said John Aronsohn, senior analyst at the Yankee Group, a technology researcher. The move is expected to accelerate investments by other cable operators in high-speed Internet services. It also is seen as approval of cable's future as a main conduit for the Internet, analysts said. ''This is an endorsement by the tech community, of which Microsoft is probably the best representative,'' said Douglas Shapiro, an analyst at Deutsche Morgan Grenfell. ''It won't just be the resources of the cable companies, but rather the weight of the entire PC and software industries.'' Comcast, which is based in Philadelphia, has been active in searching for ways to combine cable and high-speed Internet access. Mr. Gates said he will work closely with Comcast's president, Brian Roberts, to develop the strategic and technological direction of Comcast. ''Our vision for connecting the world of PCs and TVs has long included advanced broadband capabilities to deliver video, data and interactivity to the home,'' Mr. Gates said. Comcast is one of several cable companies investing in the Home Network, an on-line Internet service that provides access through cable.