MicroStrategy Issues Letter to Stockholders

Apr 19, 2001, 01:00 ET from MicroStrategy Incorporated

    VIENNA, Va., April 19 /PRNewswire/ -- MicroStrategy(R) Incorporated
 (Nasdaq: MSTR), a leading worldwide provider of business intelligence
 software, today announced that it has sent the following letter to its
 stockholders:
 
     Dear MicroStrategy Stockholder:
     Let me begin by thanking you for your continued support of MicroStrategy.
 As a stockholder of MicroStrategy, you know that the last year has been a
 rocky one for all of us in the technology industry.  However, as we announced
 earlier this month, we believe that we have set MicroStrategy upon a
 successful future course with the implementation of a number of initiatives.
     At the beginning of this month we announced a strategic restructuring that
 we think has considerable promise.  Specifically, we announced that we would
 be focusing on the business intelligence software market, eliminating or
 downsizing our involvement in non-core technology initiatives, and instituting
 a number of changes designed to reduce our structural costs.  The dual goals
 of this restructuring are to 1) focus the business on what we do best --
 platform software sales; and 2) maximize our ability to achieve our previously
 stated goal of profitability in 2001.  Thus, we have directed the entire firm
 towards our core offering -- the MicroStrategy Business Intelligence Platform.
 One core product -- MicroStrategy 7(TM).  One core market -- The Business
 Intelligence Software Market.  One core business model -- Enterprise Software.
 And one core message -- Best in Business Intelligence(TM).
     In connection with the corporate restructuring described above, we also
 successfully refinanced the $125 million in Series A Convertible Preferred
 Stock held by outside investors.  This refinancing effectively removed
 significant uncertainty by converting a variable security that could have
 resulted in significant dilution to existing shareholders into a combination
 of common stock, cash, fixed rate securities and securities that carry a fixed
 rate until their three year maturity.  We believe this refinancing is good for
 our existing shareholders and will make it easier for new investors to
 properly value and invest in our company.
     We also announced that the United States District Court for the Eastern
 District of Virginia has approved the previously announced settlement of the
 consolidated securities class action lawsuit filed against the company and
 certain of its officers and directors relating to the company's restatement of
 financial results for 1997, 1998 and 1999.  The court recognized that the
 settlement is in the best interests of both the shareholders and the company
 and will allow us to focus on executing our strategic plans and building value
 for our shareholders.
     Thus, the last few months have been busy ones as we have worked hard to
 fulfill our promise of creating a leading software business with short and
 long-term value.  I am happy to tell you that the entire MicroStrategy
 management team is fully committed to achieving this goal.
 
     We Would Like Your Help.  However, there is something that you might be
 able to do to help us, and in the process, help yourself.  As you know, like
 many stocks in the technology industry, MicroStrategy's has been recently
 trading at a low share price level.  Although general market sentiments about
 technology stocks and our company have undoubtedly played a major role in the
 recent price of our stock, management believes that the current stock price is
 also attributable in part to heavy selling pressure from "short selling" in
 the marketplace.  Therefore, let me take a minute to explain "short selling"
 and what we think you can do to help.
 
     Effect of Short Selling on a Company's Stock Price.  In "short selling,"
 traders sell stock they do not own by borrowing shares from a broker that need
 to be returned at a later date.  If the stock price goes down, the short
 sellers buy stock in the market at a lower price, return the stock to the
 broker and make a profit.  By selling first and buying later, short sellers
 benefit from stock prices going down instead of up.  This makes their interest
 in our company directly opposite from what most of our stockholders want --
 i.e., for the price of our stock to increase.  If there is a lot of short
 selling, supply of our shares may exceed demand for our shares, causing the
 stock price to go down.  In other words, short sellers can make money by
 selling enough stock short to artificially increase the volume of selling and
 drive down the market price.
 
     Short Sellers Borrow Stock From Stockholders Like You.  Where do the
 traders get the stock to borrow?  Ironically, whether you know it or not, they
 probably have been borrowing shares from stockholders like you.  If your
 shares are registered in your broker's name instead of yours or are held in a
 margin account, your broker may have lent your MicroStrategy shares out to
 these "short sellers."  In other words, if your MicroStrategy shares are
 registered in your broker's name or being held in a margin account, the
 brokers are free to lend your shares out to short sellers.  So, while short
 sellers are borrowing your stock, they are actually working against your
 interest in seeing a higher MicroStrategy stock price.
 
     While many companies experience short selling in the marketplace, the
 amount of short selling compared to the trading volume in our stock has
 recently been unusually high.  Our financial advisors believe this may be
 adding downward pressure on the price of our stock.  Friedman Billings Ramsey,
 our financial advisor, has commented, "among other factors, a large short
 position, like that existing today in MicroStrategy stock, can significantly
 depress the price of a stock.  Companies should take action to address the
 factors that lead to excessive short selling."
 
     How Stockholders Can Help Combat Short Selling.  To carry out short sales,
 traders need to borrow stock from brokers that is registered in "street name"
 or held in a margin account.  However, if enough stock is taken out of street
 name or margin accounts, short sellers will have difficulty maintaining the
 current volume of short sales.  Therefore, we are asking all of our
 shareholders to do the following:
 
     Promptly call your brokers and have your MicroStrategy stock taken out of
 street name or put into a cash account.  This only means that instead of your
 shares being registered in your broker's name or being held in a margin
 account, they would be registered in your name or placed in a cash account.
 You would still own the stock, and your ability to hold or sell the stock
 would not change.
 
     What would change?  A short seller would not be able to borrow your stock
 for short sales without your permission.  So long as the stock is registered
 in the broker's name, the broker is the legal owner of record, and can lend
 your stock to a short seller without your permission.  Similarly, so long as
 you have your stock in a margin account, it is available for loan by your
 broker.  If you have the stock registered in your own name or placed in a cash
 account, brokers will not be able to do this.
 
     Would there be any downside for stockholders in having shares registered
 in their own names or held in cash accounts?  From an economic point of view,
 the answer is no -- nothing will have changed.  The only difference would be
 administrative including some possible paperwork and expenses you may incur in
 re-registering or moving your shares.  When you want to sell, you would have
 to send your broker instructions to move the stock back into street name or
 into a margin account, and the broker may ask you to sign some transfer
 documents.  We think this is a small price to pay for relieving the heavy
 short selling pressure on our stock.
 
     When can shares be taken out of street name or a margin account?  You can
 seek to take shares out of street name or a margin account at any time.
 However, because of the heavy short selling pressure on our stock, we believe
 that your immediate help would be desirable.  Accordingly, we are asking
 stockholders to call their brokers to have their shares promptly taken out of
 street name or a margin account.
 
     The company intends to work with its transfer agent and participating
 brokers to make the process of re-registering your shares or moving them into
 cash accounts now as quick and easy as practicable.  If you have any questions
 about this process, please call Bill Chatterton at 703-744-3281, and he would
 be happy to assist you.
 
     As I set out above, the company has undertaken a number of recent steps to
 help better position us for the future.  As a shareholder, you can help.  We
 appreciate your consideration of this important matter and thank you for your
 continuing support of MicroStrategy.
 
     Very truly yours,
     Michael J. Saylor
     Chairman and CEO
 
     About MicroStrategy Incorporated
     MicroStrategy is a leading provider of business intelligence software for
 Global 5000 organizations. Since 1990, the company has specialized in helping
 businesses transform their extensive operational data into actionable
 information. MicroStrategy's business intelligence platform gives
 organizations solutions to all of their query, reporting, and advanced
 analytical needs, and distributes insight to users via Web, wireless, and
 voice.
     MicroStrategy 7(TM), the company's scalable business intelligence
 platform, is built specifically for the Internet era. Its pure-Web
 architecture provides Web reporting, security, and performance, and standards
 that are critical for deployment over the Web. Within intranets, the company's
 products provide employees with information to make better business decisions.
 In extranets, extended enterprises use MicroStrategy 7 to build stronger
 relationships by linking customers and suppliers via the Internet.
     MicroStrategy has approximately 1,100 enterprise-class customers including
 Lowe's Home Improvement Warehouse, AT&T Wireless Group, First Union
 Corporation and GlaxoSmithKline. MicroStrategy also has relationships with
 over 200 systems integrators, application development, and platform partners
 including IBM, PeopleSoft, Compaq, Informatica, and JD Edwards.
     MicroStrategy is listed on Nasdaq under the symbol MSTR. For more
 information on the company, or to purchase or demo MicroStrategy's software,
 please visit MicroStrategy's Web site at http://www.microstrategy.com .
 
     MicroStrategy, MicroStrategy 7 and Best in Business Intelligence are
 either trademarks or registered trademarks of MicroStrategy Incorporated in
 the United States and certain other countries. Other product and company names
 mentioned herein may be the trademarks of their respective owners.
     This press release may include statements that may constitute "forward-
 looking statements," including its estimates of future business prospects or
 financial results and statements containing the words "believe," "estimate,"
 "project," "expect" or similar expressions. Forward-looking statements
 inherently involve risks and uncertainties that could cause actual results of
 MicroStrategy Incorporated (the "Company") to differ materially from the
 forward-looking statements. Factors that could contribute to such differences
 include: the possibility that the securities class action and shareholder
 derivative settlement agreements will not obtain court approval or that the
 other conditions to the settlements will not be satisfied; the Company's
 ability to secure financing for its current operations and long-term plans on
 acceptable terms; the ability of the Company to implement and achieve
 widespread customer acceptance of its MicroStrategy 7 software and
 Strategy.com network on a timely basis; adverse reaction by the Company's
 employees, investors, customers, vendors and lenders to the restatement of the
 Company's financial results or its future prospects; the Company's ability to
 recognize deferred revenue through delivery of products or satisfactory
 performance of services; continued acceptance of the Company's products in the
 marketplace; the timing of significant orders; delays in the Company's ability
 to develop or ship new products; market acceptance of new products;
 competitive factors; general economic conditions; currency fluctuations and
 other risks detailed in the Company's registration statements and periodic
 reports filed with the Securities and Exchange Commission. By making these
 forward-looking statements, the Company undertakes no obligation to update
 these statements for revisions or changes after the date of this release.
 
 

SOURCE MicroStrategy Incorporated
    VIENNA, Va., April 19 /PRNewswire/ -- MicroStrategy(R) Incorporated
 (Nasdaq: MSTR), a leading worldwide provider of business intelligence
 software, today announced that it has sent the following letter to its
 stockholders:
 
     Dear MicroStrategy Stockholder:
     Let me begin by thanking you for your continued support of MicroStrategy.
 As a stockholder of MicroStrategy, you know that the last year has been a
 rocky one for all of us in the technology industry.  However, as we announced
 earlier this month, we believe that we have set MicroStrategy upon a
 successful future course with the implementation of a number of initiatives.
     At the beginning of this month we announced a strategic restructuring that
 we think has considerable promise.  Specifically, we announced that we would
 be focusing on the business intelligence software market, eliminating or
 downsizing our involvement in non-core technology initiatives, and instituting
 a number of changes designed to reduce our structural costs.  The dual goals
 of this restructuring are to 1) focus the business on what we do best --
 platform software sales; and 2) maximize our ability to achieve our previously
 stated goal of profitability in 2001.  Thus, we have directed the entire firm
 towards our core offering -- the MicroStrategy Business Intelligence Platform.
 One core product -- MicroStrategy 7(TM).  One core market -- The Business
 Intelligence Software Market.  One core business model -- Enterprise Software.
 And one core message -- Best in Business Intelligence(TM).
     In connection with the corporate restructuring described above, we also
 successfully refinanced the $125 million in Series A Convertible Preferred
 Stock held by outside investors.  This refinancing effectively removed
 significant uncertainty by converting a variable security that could have
 resulted in significant dilution to existing shareholders into a combination
 of common stock, cash, fixed rate securities and securities that carry a fixed
 rate until their three year maturity.  We believe this refinancing is good for
 our existing shareholders and will make it easier for new investors to
 properly value and invest in our company.
     We also announced that the United States District Court for the Eastern
 District of Virginia has approved the previously announced settlement of the
 consolidated securities class action lawsuit filed against the company and
 certain of its officers and directors relating to the company's restatement of
 financial results for 1997, 1998 and 1999.  The court recognized that the
 settlement is in the best interests of both the shareholders and the company
 and will allow us to focus on executing our strategic plans and building value
 for our shareholders.
     Thus, the last few months have been busy ones as we have worked hard to
 fulfill our promise of creating a leading software business with short and
 long-term value.  I am happy to tell you that the entire MicroStrategy
 management team is fully committed to achieving this goal.
 
     We Would Like Your Help.  However, there is something that you might be
 able to do to help us, and in the process, help yourself.  As you know, like
 many stocks in the technology industry, MicroStrategy's has been recently
 trading at a low share price level.  Although general market sentiments about
 technology stocks and our company have undoubtedly played a major role in the
 recent price of our stock, management believes that the current stock price is
 also attributable in part to heavy selling pressure from "short selling" in
 the marketplace.  Therefore, let me take a minute to explain "short selling"
 and what we think you can do to help.
 
     Effect of Short Selling on a Company's Stock Price.  In "short selling,"
 traders sell stock they do not own by borrowing shares from a broker that need
 to be returned at a later date.  If the stock price goes down, the short
 sellers buy stock in the market at a lower price, return the stock to the
 broker and make a profit.  By selling first and buying later, short sellers
 benefit from stock prices going down instead of up.  This makes their interest
 in our company directly opposite from what most of our stockholders want --
 i.e., for the price of our stock to increase.  If there is a lot of short
 selling, supply of our shares may exceed demand for our shares, causing the
 stock price to go down.  In other words, short sellers can make money by
 selling enough stock short to artificially increase the volume of selling and
 drive down the market price.
 
     Short Sellers Borrow Stock From Stockholders Like You.  Where do the
 traders get the stock to borrow?  Ironically, whether you know it or not, they
 probably have been borrowing shares from stockholders like you.  If your
 shares are registered in your broker's name instead of yours or are held in a
 margin account, your broker may have lent your MicroStrategy shares out to
 these "short sellers."  In other words, if your MicroStrategy shares are
 registered in your broker's name or being held in a margin account, the
 brokers are free to lend your shares out to short sellers.  So, while short
 sellers are borrowing your stock, they are actually working against your
 interest in seeing a higher MicroStrategy stock price.
 
     While many companies experience short selling in the marketplace, the
 amount of short selling compared to the trading volume in our stock has
 recently been unusually high.  Our financial advisors believe this may be
 adding downward pressure on the price of our stock.  Friedman Billings Ramsey,
 our financial advisor, has commented, "among other factors, a large short
 position, like that existing today in MicroStrategy stock, can significantly
 depress the price of a stock.  Companies should take action to address the
 factors that lead to excessive short selling."
 
     How Stockholders Can Help Combat Short Selling.  To carry out short sales,
 traders need to borrow stock from brokers that is registered in "street name"
 or held in a margin account.  However, if enough stock is taken out of street
 name or margin accounts, short sellers will have difficulty maintaining the
 current volume of short sales.  Therefore, we are asking all of our
 shareholders to do the following:
 
     Promptly call your brokers and have your MicroStrategy stock taken out of
 street name or put into a cash account.  This only means that instead of your
 shares being registered in your broker's name or being held in a margin
 account, they would be registered in your name or placed in a cash account.
 You would still own the stock, and your ability to hold or sell the stock
 would not change.
 
     What would change?  A short seller would not be able to borrow your stock
 for short sales without your permission.  So long as the stock is registered
 in the broker's name, the broker is the legal owner of record, and can lend
 your stock to a short seller without your permission.  Similarly, so long as
 you have your stock in a margin account, it is available for loan by your
 broker.  If you have the stock registered in your own name or placed in a cash
 account, brokers will not be able to do this.
 
     Would there be any downside for stockholders in having shares registered
 in their own names or held in cash accounts?  From an economic point of view,
 the answer is no -- nothing will have changed.  The only difference would be
 administrative including some possible paperwork and expenses you may incur in
 re-registering or moving your shares.  When you want to sell, you would have
 to send your broker instructions to move the stock back into street name or
 into a margin account, and the broker may ask you to sign some transfer
 documents.  We think this is a small price to pay for relieving the heavy
 short selling pressure on our stock.
 
     When can shares be taken out of street name or a margin account?  You can
 seek to take shares out of street name or a margin account at any time.
 However, because of the heavy short selling pressure on our stock, we believe
 that your immediate help would be desirable.  Accordingly, we are asking
 stockholders to call their brokers to have their shares promptly taken out of
 street name or a margin account.
 
     The company intends to work with its transfer agent and participating
 brokers to make the process of re-registering your shares or moving them into
 cash accounts now as quick and easy as practicable.  If you have any questions
 about this process, please call Bill Chatterton at 703-744-3281, and he would
 be happy to assist you.
 
     As I set out above, the company has undertaken a number of recent steps to
 help better position us for the future.  As a shareholder, you can help.  We
 appreciate your consideration of this important matter and thank you for your
 continuing support of MicroStrategy.
 
     Very truly yours,
     Michael J. Saylor
     Chairman and CEO
 
     About MicroStrategy Incorporated
     MicroStrategy is a leading provider of business intelligence software for
 Global 5000 organizations. Since 1990, the company has specialized in helping
 businesses transform their extensive operational data into actionable
 information. MicroStrategy's business intelligence platform gives
 organizations solutions to all of their query, reporting, and advanced
 analytical needs, and distributes insight to users via Web, wireless, and
 voice.
     MicroStrategy 7(TM), the company's scalable business intelligence
 platform, is built specifically for the Internet era. Its pure-Web
 architecture provides Web reporting, security, and performance, and standards
 that are critical for deployment over the Web. Within intranets, the company's
 products provide employees with information to make better business decisions.
 In extranets, extended enterprises use MicroStrategy 7 to build stronger
 relationships by linking customers and suppliers via the Internet.
     MicroStrategy has approximately 1,100 enterprise-class customers including
 Lowe's Home Improvement Warehouse, AT&T Wireless Group, First Union
 Corporation and GlaxoSmithKline. MicroStrategy also has relationships with
 over 200 systems integrators, application development, and platform partners
 including IBM, PeopleSoft, Compaq, Informatica, and JD Edwards.
     MicroStrategy is listed on Nasdaq under the symbol MSTR. For more
 information on the company, or to purchase or demo MicroStrategy's software,
 please visit MicroStrategy's Web site at http://www.microstrategy.com .
 
     MicroStrategy, MicroStrategy 7 and Best in Business Intelligence are
 either trademarks or registered trademarks of MicroStrategy Incorporated in
 the United States and certain other countries. Other product and company names
 mentioned herein may be the trademarks of their respective owners.
     This press release may include statements that may constitute "forward-
 looking statements," including its estimates of future business prospects or
 financial results and statements containing the words "believe," "estimate,"
 "project," "expect" or similar expressions. Forward-looking statements
 inherently involve risks and uncertainties that could cause actual results of
 MicroStrategy Incorporated (the "Company") to differ materially from the
 forward-looking statements. Factors that could contribute to such differences
 include: the possibility that the securities class action and shareholder
 derivative settlement agreements will not obtain court approval or that the
 other conditions to the settlements will not be satisfied; the Company's
 ability to secure financing for its current operations and long-term plans on
 acceptable terms; the ability of the Company to implement and achieve
 widespread customer acceptance of its MicroStrategy 7 software and
 Strategy.com network on a timely basis; adverse reaction by the Company's
 employees, investors, customers, vendors and lenders to the restatement of the
 Company's financial results or its future prospects; the Company's ability to
 recognize deferred revenue through delivery of products or satisfactory
 performance of services; continued acceptance of the Company's products in the
 marketplace; the timing of significant orders; delays in the Company's ability
 to develop or ship new products; market acceptance of new products;
 competitive factors; general economic conditions; currency fluctuations and
 other risks detailed in the Company's registration statements and periodic
 reports filed with the Securities and Exchange Commission. By making these
 forward-looking statements, the Company undertakes no obligation to update
 these statements for revisions or changes after the date of this release.
 
 SOURCE  MicroStrategy Incorporated