Microsoft To Acquire FOX Software

In a move intended to give it a long-sought presence in the personal computer database market, Microsoft said today it plans to acquire Fox Software, producer of a leading database program.

The deal involves an exchange of 1.36 million shares of Microsoft stock worth about $175 million for the privately held Ohio company's stock. David Fulton, Fox's president, will join Microsoft's newly created Database and Development Tools Division, which oversees the database project for Windows, its popular graphical user interface.

Fox makes a "clone" of dBASE, the leading PC database program, which last year was purchased by Borland International in its acquisition of Ashton-Tate. Borland also markets Paradox, the database program it developed in-house. The acquisition was said to give it up to 75 percent control of the PC database market. At mid-morning, Borland's stock was down $6.375 to $63.875; Microsoft was down $1.50 at $127.

Fox employs 275 to 300 people.. Microsoft Chairman William Gates said he expects most of Fox's 50 programmers to move to Redmond and expects "opportunities" for other Fox staff.

Acquiring outside technology is not unusual at Microsoft. Its PowerPoint program, a software program that allows a computer to simulate a slide presentation or other business presentation, is the result of the 1987 purchase of Sunnyvale, Calif.-based Forethought Inc., for a reported $14 million. In a 1986 stock-based deal,

Microsoft purchased Dynamical Systems Research, a Berkeley, Calif., company, that had produced a program similar to software being marketed by IBM at the time.

Microsoft for years has been trying to develop its own database program. A previous attempt was disbanded when Gates himself looked at the code and decided it was not consistent with Microsoft's standards.

Its current project, code-named Cirrus, is designed to run under Windows, a program that uses a mouse pointing device and pictograms called "icons" to make computers easier to use.

"The merger with Fox Software will provide Microsoft with great development talent, as well as leading-edge database technology," Gates said in a statement. "Our intention is to combine expertise and provide users with a family of complementary products. The two companies will benefit greatly . . ."

Gates said the acquisition will complement Microsoft's efforts in database servers for PC networks, and its newly announced Open Database Connectivity project, part of a sweeping plan to make Windows a standard for office programming and networking, as well as applications.

Networking and database are the two chief areas where Microsoft lacks market share. The networking leader, Novell, recently acquired another Microsoft competitor, Digital Research Inc., to bolster its presence in the PC market.

It "makes great sense to leverage" the Fox product under its existing FoxPro name, Gates said. Both Microsoft's in-house Cirrus program and FoxPro will be marketed when Cirrus makes it to market, he said. It is expected to enter beta testing next month.

Asked if the acquisition means Cirrus is in trouble, he said, "The last implication we want to create out of this is it means some kind of abandonment" of the project. Cirrus "is absolutely crucial to our optimism about this database area," Gates said.