You should have seen the buying frenzy in the first 30 minutes or so in AMTD, which I had. A stampede if I ever saw one, to pay over 22 bucks for a stock which you could have bought all you wanted yesterday for 16 3/4.
I wouldn't get too giddy over the MSFT thing though. That finding was widely anticipated. The real enchilada is what Unca Sugar is gonna do about it, and we won't know that for months:
The Microsoft Decision: It Can Live With Business Limitations
By Jim Seymour
Special to TheStreet.com
11/5/99 8:57 PM ET
First of all, hold your horses.
Remember that U.S. District Court Judge Thomas Penfield Jackson's opinion whether Microsoft (MSFT:Nasdaq) violated federal antitrust laws in the ways the Department of Justice has charged is just the finding of fact.
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We have a lot of process -- the parties' arguments, negotiation between Microsoft and the DOJ, potential remedies, the near-inevitable appeals -- before we get to the end of this messy trail.
Second, you really thought it was going to be otherwise? Really? That Jackson, riding Microsoft hard throughout the testimony phase of the trial, was gonna let 'em off?
Still, and only at first reading -- I literally just got my hands on the judge's findings -- it seems to me that Microsoft has a tougher row to hoe than most trial observers and analysts expected.
Including this one.
This is what hurts the most: Judge Jackson found that Microsoft had acted as a monopolist, which can be used in the remedy phase to propose limits on its operating discretion.
He also says Microsoft used its power and profits to stop competitors, effectively deterring others' investment in competing technologies. That lays a basis for finding that Microsoft's actions have hurt consumers -- an absolutely essential finding for a tough remedies ruling in a few months.
There is tough, tough language in the opinion. Even so, those findings are well short of what Microsoft could have had to deal with. But they're still worse than the Microsoft team expected.
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Could it have been otherwise, given Jackson's obvious dismay with Microsoft's feeble defense during the trial, evidence gaffes (remember the bad video presented during Microsoft VP Jim Allchin's testimony?) and classic bad attitude? After Bill Gates' simply horrible video testimony, when it seemed he couldn't remember what he'd had for breakfast?
Clearly, some of what Microsoft did was anticompetitive. And, of course, some of its actions do look bad and smell funny (read: monopolistic). No one I know expected the judge to deny the obvious.
What Microsoft most feared, I think, was an even more Draconian, harder-to-deal-with finding of fact. It has, at least, dodged that. For now.
Look for the DOJ to make much, in press conferences later tonight and over the next few weeks, of the structural relief it will demand and which it will say is justified under Jackson's findings.
But defendants don't "win" antitrust cases in the conventional sense of the word, just as defendants in criminal trials aren't found "innocent," only "not guilty." In antitrust, you win by limiting the scope of the loss. By that test:
This doesn't smell to me like a finding that is going to lead to a judge's demands for a corporate breakup. Count that as a Microsoft win.
This doesn't smell to me like a finding that is going to lead to a judge's demand to peel Internet Explorer out of the current version, let alone next year's version, of the Windows operating system. Count that as a Microsoft win.
This doesn't smell to me like a finding that is going to lead to a judge's substantial financial penalties. Count that as a Microsoft win.
This does smell to me like a finding that is going to lead to a judge's proposed remedy of imposing an IBM (IBM:NYSE)-like consent decree: Microsoft can't do this anymore, or this, or this. Count that as a Microsoft win.
Huh? Microsoft wins if forced to sign a consent decree?
You bet. Because like the long-lasting IBM decree, a 40-year war that ended only in May 1997 and was supposed to level the field for other mainframe makers, a consent decree won't have that much effect. It'll be easy for Microsoft to re-game the situation, to find ways to work around the bans.
And remember, even the IBM consent decree, the most Draconian and long-lived in the history of American jurisprudence, failed utterly to effectively restrain Big Blue and to foster greater competition in the mainframe market. When it was finally lifted two years ago, IBM still had 80%-plus share of the mainframe market.
So, for Microsoft, if Jackson's findings of fact do lead to a remedy based on a consent decree, that's going to be a relatively cheap and easy document for Microsoft to sign.
Microsoft won't make it sound so easy, of course. There will be loud complaints, and furious statements and claims that a limitation on its ability to compete is both fundamentally unfair and also unworkable.
The real risk from this point on is that the DOJ doesn't let Microsoft negotiate down the harshness of potential remedies, that the unexpected breadth of the findings of fact give credence to a tougher remedy from Jackson this spring.
That said, remember what I said when I first wrote here about this trial almost a year ago: Microsoft's game plan had to be losing at the trial, limiting damage along the way and then winning on appeal. It's clear there is support on the appellate bench for limiting Microsoft's penalties.
Even if Jackson's final decision is pushed rapidly and directly to the U.S. Supreme Court, where opinions may not yet be fully formed, I doubt that the justices would support remedies that get into dismembering today's Microsoft -- or worse.
It ain't over 'til the fat lady sings. And tonight she's not even onstage.
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