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Microsoft Corp.

Microsoft and Compaq Invest in Road Runner Cable Modem Venture

Strategic Insights

— 2 min read

Microsoft Corp. and Compaq Computer Corp. have made investments in Road Runner, a high-speed data delivery service through cable modem technology. The investment marks a significant growth in the high-speed online service, with over 90,000 customers and access to 27 million cable homes. Microsoft and Compaq will bring their expertise and technology leadership to the venture, which will be marketed under the Road Runner brand. The partnership aims to accelerate the delivery of broadband services to consumers and small businesses, leveraging the cable infrastructure to provide a great online experience.

Key Takeaways:

  • Microsoft and Compaq have made $212.5-million investments in Road Runner, each representing a 10 percent stake in the business on a fully diluted basis.
  • The Road Runner content combines a rich offering of easily navigated content and applications, taking full advantage of the unique capabilities of high-speed and constant connectivity.
  • The venture's infrastructure provides for a fully managed, high-performance, private backbone network, ensuring that users get unparalleled access to this service and the Internet.
  • Gerald M. Levin, chairman and CEO of Time Warner Inc., stated that the investment validates the cable architecture as a premier Internet distribution medium.
  • Chuck Lillis, chairman and CEO of MediaOne Group, emphasized the venture's position to rapidly deploy high-value content and services to customers.
  • Bill Gates, chairman and CEO of Microsoft, stated that the company is committed to helping enable high-speed data access and interactive content through the cable infrastructure.
  • Eckhard Pfeiffer, Compaq president and CEO, highlighted the new venture's potential to deliver vastly improved data access and services to consumers.
  • Donald Newhouse, president of Advance Publications and Newhouse Broadcasting, sees Road Runner as a way to combine the right content and services with the fastest and most reliable backbone to offer the greatest value to customers.
  • One of the major goals of the venture is to enable a fully managed, high-performance, private backbone network that ensures users get unparalleled access to this service and the Internet.
  • Road Runner's infrastructure will be interconnected with other networks, providing users with seamless access to the service and the Internet.
  • Time Warner Inc. will hold about 9 percent of the venture's ownership, while Time Warner Entertainment and MediaOne Group will hold about 20 percent and 25 percent respectively.
  • Advance/Newhouse will hold about 26 percent of the venture's ownership.

Statistics:

  • Microsoft and Compaq invested $212.5 million each in Road Runner, representing a 10 percent stake in the business on a fully diluted basis.
  • Road Runner has over 90,000 customers and access to 27 million cable homes.
  • The venture provides a fully managed, high-performance, private backbone network, ensuring users get unparalleled access to this service and the Internet.
  • Time Warner Inc. has about 9 percent ownership in the venture.
  • Time Warner Entertainment and MediaOne Group have about 20 percent and 25 percent ownership respectively.
  • Advance/Newhouse has about 26 percent ownership in the venture.

Sources:

  • Business Wire, June 15, 1998
  • Time Warner Inc.
  • Compaq Computer Corp.
  • MediaOne Group
  • Microsoft Corp.
  • Road Runner

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