Microsoft rattles markets

The surprise Justice Department agreement caps a wild ride for Microsoft on U.S. and international markets responding to a slew of company issues.

2 min read
Market reaction to the latest news coming out of Redmond, Washington, spanned three continents today as investors responded skittishly to Microsoft's earnings report, its dire warning on problems related to the Asian currency crisis, and finally the surprise court agreement with the Justice Department.

But by the time the U.S. markets closed See special coverage: Beyond contempt today, Microsoft had recovered from its financial roller-coaster ride, with its stock up a relatively minor two points. Microsoft ended the day at 138-5/8, up 1-5/8 over yesterday after reporting its earnings.

Earlier, Microsoft's fortunes had a wide impact overseas, where stocks of U.S.-based companies fell in London. There, traders reported that Microsoft-related issues added jitters to an already-shaken market.

Stateside, there was heavy trading in Microsoft options after today's announcement of the Justice Department deal, which cleared the company of contempt-of-court accusations. Microsoft still faces broader charges related to a 1995 consent decree at the core of the case.

Microsoft yesterday posted net income of $1.13 billion, or 85 cents a share, for the quarter, compared with earnings of $741 million, or 57 cents a share, a year ago. Revenues for the quarter rose to $3.59 billion, up from $2.68 billion last year.

Analysts had expected the company to report earnings of 82 cents a share, according to First Call.

Dealers said the market was also concentrating on another raft of fourth-quarter earnings today and would pay particular attention to technology and bank stocks. "Technology and bank stocks are considered to be the most sensitive to the Asia turbulence," one dealer said.

IBM (IBM) caused the markets to dip earlier in the week when it issued a warning about its future profitability that also cited the Asian currency crisis as a major concern.

In Asia itself, the Taiwan Weighted Index was at 8085.47, down 13.18 over the previous day. The Bombay Stock Exchange 200 Index was down 3.97 points at 329.94.

The Dow Jones Industrial Average closed at 7730.88 today, down 63.52, and the Nasdaq Composite Index fell 11.41 to finish at 1576.51.

Reuters contributed to this report.