Microsoft trades up after court ruling

Microsoft's stock closed regular trading up nearly 6 percent on Monday, following a decision in its favor in its antitrust case and a number of positive analyst reports.

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Shares of the software behemoth closed up $3.10 at $56.10 in regular trading on the Nasdaq on volume of more than 70 million, well above its average volume over the past several weeks. In after-hours trading on the Island ECN, the company's stock gave up a bit of its gains, trading down 15 cents at $55.95.

The move up for the stock followed a crucial ruling in Microsoft's antitrust case on Friday, when a federal judge approved much of a proposed settlement agreed to between Microsoft and the U.S. Justice Department. Seeing the ruling as a victory for the company, a number of financial analysts issued "buy" ratings on its stock on Monday.

Merrill Lynch, for instance, reiterated its buy rating, putting a 12-month price target of $61 on the stock.

The judge's decision should help Microsoft combat a European Commission antitrust investigation and several private antitrust cases filed against it in the United States, Merrill Lynch noted in a research report.

"We believe the judge's decision to uphold the settlement and disregard the dissenting states' desire to impose harsher remedies is a major victory for the company," Merrill Lynch said.

The upswing for Microsoft shares was part of a broader market rally on Monday. The Dow Jones industrial average closed up nearly 54 points at 8,571.60. Meanwhile, the Nasdaq closed up nearly 36 points at 1,396.54. CNET's Tech index closed up nearly 38 points at 1,018.81.

Merrill Lynch wasn't the only brokerage house high on Microsoft stock. Prudential Financial and Pacific Crest Securities also issued buy ratings on Microsoft shares.

Setting a price target of $65 per share, Prudential said in a research report that the judge's decision was better than expected and "99.999 percent positive" for Microsoft.

"We have been recommending (Microsoft) as a name with a strong market position, better-than-average results predictability, and strong cash flow," Prudential said in its report. "The largely intangible weight of the legal proceedings appears to be lifting off of the stock, allowing investors to focus more clearly on the strong fundamentals of the company."

Despite the legal victory, Prudential and others noted some potential dark clouds on Microsoft's horizon. Sun Microsystems, for instance, said it would continue to pursue its claims against Microsoft. And the company could be forced to settle many of the myriad private suits that have been filed against it based on the findings of fact in the original antitrust trial that declared the company a monopoly.

But Brendan Barnicle of Pacific Crest Securities wrote in a research note that Microsoft may not have much difficulty disposing of such suits.

"These suits are likely to be settled with monetary awards. With over $40 billion, Microsoft can settle lots of suits," Barnicle said.

U.S. District Court Judge Colleen Kollar-Kotelly on Friday largely upheld the settlement agreed to between Microsoft, the U.S. Justice Department and nine states attorneys general. Kollar-Kotelly denied requests by nine dissenting states attorneys general to impose more onerous restrictions on the software company.

The settlement largely covers Microsoft's business practices, requiring it to disclose application programming interfaces (APIs) and communications protocols to software developers. The sanctions will be in place for at least five years and will be overseen by Kollar-Kotelly.