The only difference now is the stock's trading 15 percent cheaper than it was Friday night.
Judge Thomas Penfield Jackson concluded that Microsoft mounted "a deliberate assault upon entrepreneurial efforts" that could have allowed more competition for PC operating systems was just a reiteration of what Wall Street's known all along.
Jackson went on to say Microsoft violated the Sherman Antitrust Act, maintaining "monopoly power by anti-competitive means" and trying to take over the Web browser market.
He also ruled that Microsoft violated another section of the law by "unlawfully tying its Web browser to its operating system" and could be sued under state anti-competition laws.
None of this is new but ahead of the official decision, Microsoft shares plunged 15 3/8, or 15 percent, to 90 7/8, dragging the rest of the Nasdaq with it.
Microsoft officials said they plan to vigorously appeal the decision, a process that could take months or years and won't even begin until the remedies process begins.
"We will seek an expedited appeal of this ruling," Microsoft spokesman Tom Pilla said.
Pilla noted an appeal could be filed only after Jackson decides on legal remedies, a process that will take several months as he weighs proposals from the US Justice Department and the 19 states involved in the case.
Meanwhile, Microsoft gets to continue selling its Windows 2000 system while maintaining its iron-tight grip on the world's software market.
Analysts weren't surprised
While the tone of Jackson's decision was decidedly critical of Microsoft, analysts said this latest episode should have little effect on the stock's performance for the foreseeable future.
"Based upon the news of the last couple of days, this is the expected outcome we have been looking for, not the one we had been hoping for," said Barry Hyman, a market strategist at Ehrenkrantz, King Nussbaum. "I would think that Microsoft might trade lower another five to 10 percent over time, depending on the remedies. The immediate reaction might be a relief."
In the midst of all the carnage Monday, several analysts reiterated their "strong buy" recommendations on the stock, telling investors that Microsoft shares are trading at a discount and cite Windows 2000 sales as the key driver for growth.
Wall Street is likely to temporarily forget the antitrust trial once Microsoft reports its third quarter earnings. On April 20 after market close, Microsoft is expected to report earnings of 41 cents a share, according to First Call.
"This will be a one day thing," said Andrew Brousseau, an analyst with SG Cowen Securities. "This case just goes on and on."
Brosseau, who reiterated his "strong buy" rating on Monday, said fears about the antitrust battle will hang over shares, but investors will soon focus on the fundamentals and a strong Windows 2000 sales cycle. The third quarter will show some Windows 2000 sales, but the June and September quarters are expected to deliver strong growth.
"It's so hard to speculate what is going on with the potential remedies that I just focus on the fundamentals," said Brousseau, who has a $140 (£88) price target on the stock.
Andrew Roskill, an analyst with Warburg Dillion Read, agreed. He said Microsoft shares will have a rough week and give back most of the recent gains. Microsoft has surged as investors hoped for a settlement between the government and Microsoft.
Roskill said the short term outlook for Microsoft shares is dicey. Investors will react to Jackson's ruling, Microsoft's reply and then Jackson's final ruling in two to three months.
But Microsoft will immediately appeal whatever Jackson rules.
"By then the case will be even more moot than it is now," said Roskill.
Roskill 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."
The appeal process will boost Microsoft shares because investors will quickly realize that the software giant stands a better chance to win. The appeals process is also likely to coincide with the strong June and September quarters. Toss in the fact that analysts will reiterate that Microsoft is a bargain relative to its peers and you could have a rally in the summer and fall.
Watch the competition
Unlike the last time Jackson issued a ruling, Microsoft competitors didn't gain on the software giant's woes in Monday's regular session.
However, after the bell companies such as Red Hat, Corel Corp. and Sun Microsystems made slight gains.
Bill Schaff, a portfolio manager at Bay Isle Financial, said his firm has deliberately avoided Microsoft because of the antitrust case.
"We don't own a lot of Microsoft because you always have to be weary of the overhang of major litigation," Schaff said. "But to be honest, the break-up value of Microsoft would be much more valuable than it is now. But will those pieces be as powerful without access to the operating system?"
Microsoft shares slid to 89 1/2 in after-hours trading, off 25 percent from its 52-week high of 119 15/16 set in December.
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