Microsoft shares fell 44 cents, or less than 1 percent, to close $61.40. On Thursday, shares jumped more than 6 percent on word that an antitrust deal was likely.
Few analysts expected Microsoft shares to get a lot more mileage out of the antitrust settlement.
On Wall Street, there is a saying that most traders live by: Buy on the rumor, sell on the news. Word of a Microsoft settlement came Thursday, driving shares higher. When the official news came, Wall Street yawned.
Under the settlement, Microsoft will submit to behavioral restrictions limiting the company's contractual agreements and other activities. The Windows operating system is largely unchanged, meaning Windows XP will be unencumbered by legal hassles.
"We see the Street as already having priced these restrictions into the stock," Salomon Smith Barney analyst Richard Gardner said.
One Wall Street analyst admitted he was barely following the developments with the settlement. "This isn't over, and it'll never be since Microsoft is a big target," he said. "It's like IBM in the '70s. The only department with an unlimited budget is the legal department."
Wall Street analysts in general viewed the settlement as a positive but quickly noted that what the federal government does is only one part of a three-headed legal problem. States that are pursuing legal remedies against Microsoft and the European Commission are two hurdles the company has yet to clear.
"There are two overhangs here," Bernstein analyst Charles Dibona said. "The states are a fly in the ointment, and what the EU does is also a concern. There's also the potential for civil suits."
"Microsoft is a tempting target," he added.
Given that Microsoft is always going to have legal expenses, analysts have put the antitrust worries on the backburner throughout the trial--and Friday was no different. Even when Microsoft suffered a legal setback, most analysts were forgiving, especially since the software giant has a history of beating earnings estimates and has a whopping $36 billion in cash.
"Our view of the trial remains that of a sideshow, relative to the primary story of growth ahead that motivates our placement of Microsoft on the focus list: renewed strength in execution with Windows 2000 and XP and the ongoing penetration into the enterprise software market," J.P. Morgan H&Q analyst Christopher Galvin said in a research note to clients.
Galvin did note that having one less legal hassle to worry about will allow investors to focus on Microsoft's product cycle--and the earnings and revenue growth it may bring.
"We continue to view the Microsoft investment thesis more levered off the imminent new product cycle represented by the Windows 2000 product family, Windows XP, and Xbox," Galvin said.
Not all analysts were dismissive about the importance of the DOJ settlement.
Brendan Barnicle, an analyst at Pacific Crest, viewed the settlement as a "great deal for Microsoft," adding that he did not think "the government can monitor its restrictions."
Barnicle said the DOJ settlement is likely to pave the way for the states to settle, and to deter any other cases out there.
"States don't have the resources to pursue Microsoft," he said. "Without the DOJ, it's hard to see any cases being that damaging."