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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 685.66

+0.2%

Dec 5 4:00 PM EST

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To: John Madarasz who wrote (32999)	11/9/1999 7:24:00 PM
From: pater tenebrarum	Read Replies (2) of 99985

John, apart from the fact that we would be comparing different businesses here, i don't think that a break-up of MSFT would necessarily be a big problem...i see the main problem for MSFT in the potential for litigation that this case has opened up. if WS analysts were honest about this, they would at the very least have admitted that the potential for damage is as of yet hard to gauge instead of proclaiming that there is no problem at all aside from a short term dip in the stock price. as to how a breaking up of MSFT would be received by the market, the main question is probably whether MSFT's de facto monopoly in operating systems is truly endangered. currently the stock price incorporates a monopoly premium and an 'execution' premium (i.e. a premium for being able to fend off anything that might endanger the monopoly). so the monopoly question is crucial...i wonder actually what the DoJ can possibly do about that. however, the litigation threat is a different kettle of fish and could take a toll on MSFT as an investment vehicle. perhaps it'll all blow over in the end, but nobody can be certain of this. regards, hb

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