Wall Street has largely shrugged off the damning antitrust findings against Microsoft yesterday despite intimations from the US Justice Department that it may eventually use the judgment to push for a break-up of the company.
Microsoft's shares dropped more than 8 per cent in early trading but quickly rebounded as the stock market chose to play down Friday's federal court ruling.
Judge Thomas Penfield Jackson found that the company had used its dominant position to engage in predatory behaviour, setting the stage for a final legal judgment early next year in the landmark antitrust case.
By the closing bell in New York, the software maker's shares stood at $89 15/16, down just $1 5/8 , or 1.77 per cent.
This left Mr Bill Gates' personal holding worth around $70 billion, down around $1.2 billion on the day - earlier in the day the paper value of his shares was down by well over $5 billion.
The muted stock market reaction in part reflected the fact that investors had expected the judge to find against Microsoft, several Wall Street analysts said - though his sweeping condemnation was harsher than expected.
The "universally negative" legal finding, while surprising, made it more likely that the software company would seek an early settlement of the case with the Justice Department, said Mr Neil Herman, an analyst at Salomon Smith Barney. Such a move would "ignite the (company's) stock", he added.
Other analysts gave Microsoft a fair chance of winning an appeal against the eventual ruling from Judge Jackson, or of taking the case to the Supreme Court, where a final decision could be at least three years away.
By that time, the fast pace of change in the computer industry and the emergence of new rivals to Microsoft's dominant position in the software industry could make the case less relevant. The trial looks backwards to the "PCcentric world" of the 1990s, not one in which Microsoft faces stiffer competition from Internet competitors, according to analysts at Merrill Lynch.
Even an eventual break-up of Microsoft might work out to the benefit of the company's shareholders, said Mr Michael Kwatinetz, software analyst at Credit Suisse First Boston. The corporate dismemberments that followed two other landmark antitrust cases, involving Standard Oil and AT&T, left investors holding shares in constituent parts that were worth more than the whole, he added.
Mr Frank Korth, vice president and director of equity growth at National City Corp's investment management business, said the relatively benign reaction to Friday's ruling showed that investors were taking a longer-term view. "We recognise the potential threat (to Microsoft) long term but in the short run we think the market is acting rationally," he said.
Mr Korth said that technology investors typically look ahead to the next quarter or perhaps 18 months if they take a longer view. With the Microsoft appeal process potentially taking years to complete, he said, the market's measured response was not a great surprise.
Shares in some of Microsoft's biggest rivals jumped after Friday's findings as investors anticipated that they would benefit from any event that curtailed the company's actions.
Sun Microsystems, whose chairman, Mr Scott McNealy, has been Microsoft's most strident critic, gained $5 5/16 to $115. Meanwhile, companies involved in the open-source Linux computer operating system, a potential rival to Microsoft's Windows, rose strongly. Red Hat, the best-known of the Linux companies, climbed $19 15/16 to $105 1/4 .
The full text of the court ruling on Microsoft can be found on www.usdoj.gov/atr/cases
