I don't believe MSFT will settle this matter.
Traditionally, there is little that can be done on appeal with a findings of fact since the trial court is deemed to be in the best position to view the demeanor of the parties and the witnesses. Unless there is a profound and egregious error on the facts by the trial judge (i.e., Judge Jackson), those findings will not be disturbed on appeal.
I think Judge Jackson was wise to appoint a mediator in an effort to bring the parties together to attempt to resolve this matter. Initially, I thought that a potential settlement would have been reached because I believed that a breakup of the company was one of the remedies Judge Jackson could have ordered and I thought that would be enough of a deterrent to foster a settlement. However, I now feel that it is unlikely that a breakup will be ordered. Rather, I believe that Judge Jackson will order the disclosure of the source code, as well as other punitive sanctions. I believe MSFT may be willing to tolerate such a determination, and thus await the ruling, given its appellate remedies.
The psychological impact of the forthcoming ruling by Judge Jackson will, I believe, have a profound effect on the MSFT stock, both short term and long term.
The appeal in this instance will, as I understand it, not be heard by the U.S. Court of Appeals but will go directly to the Supreme Court. Because of the novelty and complexity of the issue, with the likelihood of numerous amicus briefs being filed, I don't believe such an appeal will be heard for at least a year and will then take months to decide. I would guess we could be looking at the end of 2001 before the Supreme Court rules on this one.
An issue as novel as this is always susceptible to reversal or modification on appeal. However, in the interim, damage will have been done to MSFT from the standpoint of the litigation's impact on MSFT stock price. There will be an explosion of class action and derivative suits, as well as actions from other aggrieved parties (i.e., Netscape).
That having been said, I feel that the beneficiaries of all of this will be companies like SUNW. In the market place, SUNW will be percieved as the "winner" and MSFT as the "loser." Scott McNealy will have his day in the sun and will be able to say "I told you so" and "they got what they deserved." McNealy's image will be enhanced. Gates' image will be diminished.
I have little doubt that SUNW's recent move is related, in part, to the forthcoming MSFT decision. I felt this way prior to Judge Jackson rendering his findings of fact (and bought more shares, accordingly) and I feel this way now. I believe a punitive ruling by Judge Jackson may, indeed, have a profound and significant effect on SUNW's share price.
Many months ago I posted on the MSFT board that the best hedge against downward movement of MSFT stock in light of the pendency of the antitrust litigation was to buy SUNW stock. Needless to say, that position was not well received on the MSFT thread.
Bottom line, if I had a position in MSFT right now and I wanted to preserve that position, I'd be buying SUNW long as a hedge. IMHO, SUNW is in a very good position to make a significant move right now. If Judge Jackson renders his conclusions of law (as I think he will), a move in SUNW's price to the $120 - $130 area would not surprise me. And then we'll get our split.
Good luck to all SUNW longs. They won't need it! Good luck to all MSFT longs. They will!
Tecinvestor |
