How about the DOJ wins the trial?
I just happen to be taking an antitrust course in law school right now. Here is my quick take on what will happen:
1. MSFT gets tagged as a monopoly... in operating systems... but so what? Well, it means they are more susceptible to complaints about anticompetitive behavior. MSFT execs go to charm school.
2. The worst remedy - divestiture (which, by the way, would increase the value of the company for shareholders) - won't happen now. The key is how you define the market. The trial is about anticompetitive behavior in the 1995-96 timeframe... the market was OS and browsers... but, alas, the market really is Internet based business. MSFT has put away 17 billion and growing since then, and is buying webtv, hotmail, you name it... I asked my professor the other day, "Does antitrust doctrine have a way to account for a change in the market in the course of the trial." Simple answer: "No." But you can't belp but notice that AOL/NSCP happened midway through the government's case in chief... and it will affect the remedy, which is the only really important issue inthe case... coincidence? Nah: Sun Tzu - attack your enemy when he is halfway across the bridge.. you only have to fight half his force that way. Jim Barksdale just used Gary Reback and the US Government to suppress his opponent and triple his stock price.
In response to another poster who predicted we ramp up to earnings, then crater:
We are actually going to ramp up to earnings... then accelerate upward on stock split news... due to:
- MSFTs case looking stronger and stronger
- MSFT focus on Internet advertising (msn, sidewalk, expedia, hotmail). (The Net stocks, by the way, while grossly overvalued will NOT crater. Some will go down... maybe even 100 points, but so what? The net is for real. Ebay is the tip of the iceberg. I go to school and work in Silicon Valley, and I know of a ton of cool businesses that are headed towards the market.) MSFT, like CSCO, WCOM, and a few others will begin to look undervalued at a PE below 100. So what if there is no historical precedent for that? These companies have a higher potential for synergism and dynamic relationships than almost any of their peers... and in the case of MSFT they have 17+ billion in the bank... that buys A LOT of innovation.
- New product cycles begin to look not just good, but great. Windows2K begins to gather steam.
I am calling it here: 92, split adjusted by April Options Expiration. |
