Morgan, I agree with the your analysis on the way Microsoft traded. I think we also agree that the legal problems are what is holding this stock down and has been for a few months.
One thing i would point out is that MSFT did finish with a flurry of buying. I don't believe most investors really looked into the implications of the Bristol victory. Only later in the day, after the market close, did i see a lot of "experts" come on TV saying that MSFT's win would be deterent for future "bristols" and a clear signal that MSFT will not give in and settle such cases. Certainly, the lawyers receiving continency fees won't be as willing to take on Microsoft. Many investors would have just dismissed the case as a very minor victory for MSFT. I agree on that point to a small degree. It is only a small victory unrelated to the wider legal action taken by the States/DOJ. However, it was a decision by Jury in Bristol's home state. I also saw Blumenthaul (AG for Connecticut), one of MSFT's biggest critics, speaking very neutral towards MSFT. He sounded more like a MSFT paid lobbyist. I have felt that the States were the biggest hurdles to a settlement in anti-trust case. Now, many of the States AGs will start to rethink their positions. If companies can't convince juries that MSFT is the "evil empire" in their home states, it is a sign that MSFT is a very well liked company. I realize this is a simple conclusion but that is what i sense.
In addition, MSFT might now be willing to concede a little more now in the anti-trust case just to get them them off its back------A win win situation. With the Bristol victory, they also go out winners as I believe they will not concede having monopoly status in any settlement.
Then we have Caldera, which must be sweating at the possibility of having jury decide the case. Their problems with MSFT date back to a time when it could be argued MSFT did not enjoy a "monopoly" status.
I think investors (particulary big mutual funds) are going to come to the conclusion that there is more to this victory against Bristol than meets the eye. As a result, we should see some big buying at the open. They had a whole weekend to digest the news and buy MSFT and/or don't sell out their positions will be their conclusion, IMHO. I don't think a lot of the seller would have been selling Friday if they had time to really think about their decision. It would surprise me if it did not start up at 101 at the open. I could be wrong but i sense a huge sentiment shift will bring in a lot of buyers on any weakness in the day. If there was no decision on Bristol and no announcement on MSN, i would have been willing to bet there would have been a selloff going into earnings.
BTW---I had been posting a lot about how Index funds are winning MSFT a lot of friends. The average joe may be biased against small companies if they take MSFT to court. After all his pension fund shows Microsoft as the top holding. As a result, he has associated himself with a winner. Furthermore, he has a financial interest in seeing MSFT win. He is a voter---and a possible jurist. In addition, everybody loves a winner.
This type of thinking is what will scare the States to settle the case. I don't know about the DOJ but i would bet there are political influences possible. The Democrats are losing a lot of their friends at Microsoft---someone had stated that Bill Gates is a registered Democrat. It is simply politics---has been and will be. |
