Expectation that the appeals court would reject the break-up order was already built into the stock price, and there are a gaggle of possible legal scenarios for the company to sort out.
Shares closed up 26 cents to $73 on Friday. Just after the ruling was announced Thursday, shares volleyed to a high of $76.15 for the day, as more than 64 million shares changed hands.
The appeals court ruling is only "a modest incremental positive," Merrill Lynch analyst Henry Blodget said in an evaluation of the stock's outlook after the court ruling.
"This ruling was close to what we already felt was 'in the stock,'" he wrote. "Nearly everyone expected the breakup order to be reversed."
Not that the ruling doesn't contain some good news for the company. The court decreed that Microsoft did not attempt to monopolize the browser market. And it didn't agree with allegations that the company illegally tied its browser to Windows; that decision has been sent back to a lower court.
But the bad news from the ruling may have more ramifications than most investors have considered.
More private lawsuits
The court accepted Jackson's most serious findings of liability--Microsoft is guilty of illegally maintaining its Windows monopoly.
This leaves Microsoft open to an onslaught of private antitrust lawsuits from civil litigation and competitors such as Sun Microsystems and AOL Time Warner.
"The real risk associated with the ruling is potential civil litigation," wrote Blair, William & Co. analyst Laura Lederman. Though the potential lawsuits aren't likely to affect the stock in the next year or two, she added, there are some concrete possibilities on the far horizon.
"AOL/Netscape has the best case," Lederman said, and Microsoft "could owe damages to the tune of $3 billion."
Sun and Intel don't appear to have strong cases, but PC hardware sellers such as Dell Computer and Compaq Computer might be able to claim that Microsoft took advantage of its monopoly by overcharging for Windows, and thus owes them a rebate.
As for individual lawsuits, 20 states allow individual purchaser claims. "We believe this litigation is five to six years away in that most people who bring these suits will wait for the conclusion of the major civil lawsuits," Lederman noted.
The prospect of a settlement, which is a good possibility considering comments from Microsoft executives and the leanings of the Bush administration, would do the most good for the stock, analysts said.
"We believe a settlement is the most likely outcome," said Wit SoundView analyst Mark Specker, who maintained his "strong buy" rating and $80 price target on the stock, largely based on that possibility.
"Microsoft's improved negotiating position is the most stock-positive element," Specker said. He suggested that the company should be able to negotiate a settlement with the government that won't restrict its ability to add features and innovate.
But even if the company decides to settle before the case is remanded to the lower court, there is still the question of what conduct-related restrictions the settlement will involve.
"We would be surprised if they turned out to be trivial," Blodget said, given that the court upheld the most serious allegation against Microsoft--that it did use illegal means to maintain its monopoly.
Far from over
Though analysts may disagree on just how positive the ruling is for the company, they have no problem reaching consensus on one issue: The case is going to drag on for a long time.
"The litigation that was remitted back to the district court could take six to nine months to be ruled upon," Lederman wrote. "Additionally, both parties (Microsoft and the Justice Department) could appeal the case to the Supreme Court, adding another year. Lastly, the resulting civil litigation could take three to five years to resolve before Microsoft makes its first payment. The case is far from over."