Li Cai,This post sums things up rather well. I say to Bill, hang tough with the DOJ, keep thinking of the future long term. Even though I've lost a bundle this month, I've made many bundles over the years with MSFT. This is probably one of those rare buying opportunities in this stock.It may drop to 110, I doubt 100. Also, everyone is talking about this drop from approx. 150 to 120, so what, that's only 20%. Anybody who can't stand a 20% drop should not buy any stock, much less a tech stock. I say thank you to Bill and all the rest at MSFT. Jim
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Wednesday December 24, 6:10 pm Eastern Time
Microsoft stock at seven-month low as battle grows
(Updates with Microsoft comment, grafs 9-10)
By Martin Wolk
SEATTLE, Dec 24 (Reuters) - Microsoft Corp.(Nasdaq:MSFT - news) stock fell to a seven-month low Wednesday as investors grew increasingly concerned about bad publicity generated by the company's bitter battle with federal antitrust regulators.
Microsoft fell $4.375 to $118.94, its lowest close since May 19, with more than 11 million shares traded on Nasdaq, where it was the most active issue.
''In my opinion the stock is trading in direct response to the legal activity,'' said David Readerman of NationsBanc Montgomery Securities. ''As the legal action between the U.S. government and Microsoft is intensifying, investors are heading to the sidelines.''
On Tuesday, Microsoft hardened its stance with three court filings that criticized U.S. District Judge Thomas Penfield Jackson and called into question his appointment of Harvard law professor Lawrence Lessig as a special master in the case.
Microsoft is still up 44 percent from last year's close of $82.625, and some of the recent activity has been attributed to profit-taking ahead of what is expected to be a year of slow growth.
But Microsoft has fallen 19 percent since Dec. 8, just before an order by Jackson triggered a flurry of legal activity in the conflict between the Redmond, Wash.-based company and the U.S. Justice Department.
Even industry analysts who support Microsoft's uncompromising legal strategy said the company's harsh language in court filings and public statements was turning the case into a public relations disaster.
''From a technical standpoint, I think they're building a good case,'' said Tim Bajarin, president of Creative Strategies, a technology consulting firm. ''I have a hard time with the way they've kind of thumbed their nose at Justice. I don't think that's a wise move. That's an attitude issue.''
A Microsoft official said rhetoric has been heated on both sides and said the company has no intention of backing down.
''Nobody likes to see negative press, but we're fighting for a principle that is absolutely fundamental to the future of the software industry and the future of Microsoft,'' company spokesman Mark Murray said. ''Consumers and software developers should determine what goes into a piece of software, not government regulators.''
The Justice Department launched the latest phase in the long-running legal saga Oct. 20, when it charged Microsoft with violating a 1995 decree the company signed to settle antitrust charges.
On Dec. 11, Jackson ordered Microsoft to offer computer makers the option of licensing its Windows 95 operating system without the Internet Explorer browser, while Lessig gathers more facts in the case.
Microsoft, which contends the browser is integral to the operating system, then said it would comply with the order by allowing computer makers to delete all browser-related code from Windows 95, rendering the product useless.
''This positioning so it looks like they're not willing to do anything is just an amazing PR failure,'' said Rob Enderle of Giga Information Group.
He noted that the Justice Department's request for a $1 million-a-day contempt fine on Microsoft pales beside the $36 billion in market capitalization the company has lost in the past three weeks.
''They're losing prior to the judgment even being finalized,'' he said.
But analysts said Microsoft Chairman Bill Gates, whose own stake has drifted down to $32 billion from nearly $40 billion, always has focused on the long term, and company strategists feel any compromise could open the door to government involvement in the design of future software products.
''I think they've drawn their line in the sand here,'' said analyst Rick Sherlund of Goldman Sachs. ''I just dont think that any technology company wants a bureaucracy to be involved in their business. Bureaucracies are detested in the technology field.''
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