Thread,
Tuesday June 23, 8:21 pm Eastern Time
ANALYSIS-Case against Microsoft hurt by ruling
By Martin Wolk
SEATTLE, June 23 (Reuters) - Microsoft Corp. is not completely out of the woods, but a federal appeals court decision on Tuesday has badly damaged a landmark antitrust case against the software giant, analysts said.
Although the appeals court ruling came in a case stemming from a 3-year-old consent decree, analysts and company executives said the broad language of the 40-page decision would have a major impact on the more recent antitrust filing.
''This is a very powerful and very informing decision from the court of appeals, and it does bear on the issues in the Windows 98 litigation,'' Microsoft Senior Vice President Bill Neukom, the company's top lawyer, said. ''We intend to use this clarifying and guiding opinion from the court of appeals to our best advantage as we go forward.''
He and other company executives clearly were jubilant at the appeals court's conclusion that its Windows 95 and Internet Explorer browser constituted an integrated product, as the company has maintained all along.
The ruling does not specifically mention Windows 98, which is at the core of the new antitrust case filed by state and federal antitrust regulators. But the test laid out by the court easily would be passed by Windows 98, which integrates the Internet functionality even more tightly than Windows 95.
''The Justice Department's position has effectively been repudiated already,'' said Daniel Wall, a San Francisco antitrust attorney who has worked for Microsoft in the past.
''I think that just about everybody thought the heart of the government case is Microsoft should not be able to design the browser into Windows 98, and that's all but dead right now,'' Wall said.
Microsoft stock surged $4.94 to close at a record $100.75 on Nasdaq, where it was the most active issue. Microsoft rival Netscape Communications Corp. slipped 56 cents to $26.19.
To be sure, state and federal regulators have other claims against Microsoft, and analysts expect the antitrust case to go forward with a trial scheduled to begin Sept. 8.
''I view it as a bump in the road with limited significance,'' Connecticut Attorney General Richard Blumenthal told Reuters.
In addition to claims related to the Internet browser market, Connecticut and 19 other states contend Microsoft has illegally maintained a monopoly in the market for office productivity software and restrained trade through its licensing agreements.
Mike Pettit, executive director of a Washington-based trade group composed mainly of Microsoft rivals, said the software giant remained vulnerable.
''The ongoing and widening investigation continues to bring to light new evidence concerning a whole host of Microsoft's predatory and anti-competitive practices as well as the company's unyielding, clear intent to illegally leverage its monopoly position,'' he said.
But investors clearly believe the legal risk is subsiding, David Readerman, an analyst with NationsBanc Montgomery Securities, said.
''The victory at the appellate level is important,'' he said. ''I think it strengthens and helps Microsoft's case going into the Sept. 8 court hearing. But it's not over -- we're not done.''
Rob Enderle, who follows Microsoft for market research firm Giga Information Group, said the ruling vindicates Microsoft's ''pragmatic legal approach.''
''They appear to have a good sense of what the court wants to see,'' he said. ''And they've toned down their attitude quite a bit.''
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