Hey investors, where do you want to go today?
As expected, Judge Thomas Penfield Jackson issued his findings of law against Microsoft Corp. (Nasdaq: MSFT) in the ongoing antitrust battle. As expected, Jackson ruled Microsoft was evil.
Microsoft's campaign "can be broken down into discrete categories of activity, several of which on their own independently satisfy the second element of a monopoly maintenance claim," wrote Jackson. "But only when the separate categories of conduct are viewed, as they should be, as a single, well-coordinated course of action does the full extent of the violence that Microsoft has done to the competitive process reveal itself."
Good theater, but nothing is new there. Wall Street knows Microsoft plays hardball – which is why a lot of institutions and individuals own shares. Since the market hates surprises, Jackson's ruling almost qualifies as good news. If you're a long-term investor, you got Microsoft shares on sale Monday. Why buy now? Two words -- appeal and time.
This battle isn't going to end any time soon. Both the government and Microsoft held press conferences that had enough bluster to make boxing promoter Don King proud. But it's only round two.
The government said it was a great day for competition. Every company, including Microsoft, has to play by the rules.
Microsoft said it will appeal -- and win. CEO Steve Ballmer said it ain't over until the appeal is over.
Ballmer's right. And that's why some investors will dive in. Microsoft shares plunged 15 percent on Monday in the hours leading up to Jackson's ruling. It was selling ahead of the news. Now that the news is out, Microsoft shares could gain.
Jackson's ruling is just one step. He has to propose remedies. And then there's the appeals process. Microsoft is going to fight any remedy. That fact will drag this antitrust suit along for years. By then will anyone remember Netscape?
By time the case is resolved, Microsoft will have almost two years to gain a strong foothold in the Internet software market. Investors won't remember this case next week.
Speaking of short-term memories, Microsoft's not-so-merry band of lawsuits will soon take a back seat to earnings and the software giant's soon-to-be-announced five-year plan. Microsoft reports third quarter earnings on April 20.
The March quarter will be decent, but many analysts are expecting strong results for the June and September periods. Windows 2000 sales will be the real growth engine, said analysts.
Windows 2000 sales kick in just as the appeals process gets under way. That double dose of good news may have Microsoft rallying into the fall. Microsoft is also seeking to move the appeals process along quickly.
Andrew Roskill, an analyst with Warburg Dillion Read, reckons that Microsoft shares will rebound once the appeals process starts. "They have better prospects in the appellate court," said Roskill. "Microsoft can appeal to the Supreme Court."
It's also worth noting that Microsoft's antitrust woes have provided buying opportunities in the last year (chart). Jackson last ruled against Microsoft in November.
Odds and ends