Shares in Microsoft climbed more than 2 percent, up $1.60 to $72.74--down from a high of $76.15 for the day. More than 64 million shares traded hands. Halted right before the ruling was released, shares resumed trading around 11:50 a.m. PDT.
Pacific Crest Securities analyst Brendan Barnicle said investors are likely to benefit from Thursday's ruling not only now, but in the future.
"Although this case has to go back to the district courts, it pushes the timeline further out and minimizes any threat to the company and its stock," Barnicle said. "A cloud has been removed, and it could be the next catalyst for the stock, which has been stalled in the $60 to $70 range."
One J.P. Morgan Chase H&Q analyst found the court's decision encouraging enough to raise his recommendation to "buy" from "long-term buy."
"We expect the decision to drive the stock on a short-term basis and clear the way for operational issues to come to the forefront in investors' minds, such as the performance of Office XP, Windows XP, the new raft of enterprise applications and Xbox," analyst Christopher Galvin said in a report Thursday.
Other analysts signaled the decision as a win for Microsoft.
Henry Blodget, a Merrill Lynch analyst, said the court's ruling was slightly better than he had expected and that it may give Microsoft more freedom to compete as it chooses.
He specifically pointed to an important, partial win for the software giant on a third antitrust charge.
"Importantly, (the court) partially rejected and partially upheld the 'monopoly maintenance' charge relating to the Windows OS, which we believe is the most serious charge of the three," Blodget said in his report. "Because the court rejected one of the three findings and partially rejected the most serious finding, we regard this decision as better for Microsoft than we expected."
For Microsoft, the favorable decision by the appeals court comes a year after a major defeat in the lower court. Last June, U.S. District Judge Thomas Penfield Jackson issued an order to break Microsoft into two parts: an operating system and an applications company.
Analysts at the time said a Microsoft applications company would be the more attractive investment of the two, given its greater growth potential.
Shares in the software giant fell only a couple of points a day after Jackson's ruling and have since remained around the same level.
But Microsoft shares took a much steeper hit when Jackson issued another unfavorable ruling just two months prior.
In April 2000, he said Microsoft had violated the 1890 Sherman Act by illegally using its operating system monopoly and unlawfully extending it into the browser market. Microsoft's shares tumbled more than 14 percent on the news.
Overall, however, Microsoft's shares have not taken a large hit since the antitrust trial began in October 1998. The company has seen its stock price climb roughly 40 percent, while the Nasdaq has fallen 46 percent.
"The stock has done remarkably well. It has been able to maintain its level despite the case and volatility in the market," Barnicle said. "And now with the favorable appeal decision, expectations for a positive second quarter, and their increased product diversification, Microsoft is a relatively safe haven for investors."