Microsoft Trying to Rebuild Tarnished Case nytimes.com
Here's the NYT story of the day, Bearded One. As a long running hearts and minds guy on the matter, I find it interesting. As this story points out, and as I've always agreed, the investor impact of the suit is still unclear and may not be bad even if it ends in a breakup. There's a long time before the day of reckoning, with appeals going up to the Supreme Court, perhaps even before the very hypothetical issue of remedies comes up. As a long running advocate of both open software and the "sucks less" variant of "what the consumer wants", I'd say the emergence of Linux is probably more important than this trial in holding Microsoft in check. The trial sure is entertaining, though.
As a courtroom interrogator, David Boies, the Justice Department's lead trial lawyer, has few equals. He cross-examines like a jazz musician, starting with a few themes but mostly improvising. He constantly probes for embarrassing weaknesses.
He confronted Schmalensee of MIT with his previous writing, which seemed to contradict his testimony. He forced Paul Maritz, a group vice president at Microsoft who is a product and marketing whiz (but not an economist), to defend the company's thinnest economic argument -- that it is not a monopoly.
Microsoft's legal team says the Boies approach is more show than substance, leaving most of the direct testimony of Microsoft's witnesses unchallenged and trying instead to make them look bad on the stand.
Perhaps, but he has succeeded in that.
"He's done a very good job of rattling Microsoft's witnesses and Sullivan & Cromwell," the company's law firm, said Stephen Axinn, an antitrust litigator who is a partner in Axinn, Veltrop & Harkrider.
Yet in its antitrust battle, Microsoft has three levels of concern.
The first is public relations -- and its reputation is a bit mud-spattered as a result of the trial. The second is the trial verdict -- and the expectation, even on Wall Street, is that the company will absorb a loss of some kind in Jackson's court, though the lasting verdict will be rendered by a higher court.
The third, and overriding, objective for Microsoft is defending what it regards as its way of life, the way it does business. Antitrust experts and Wall Street investors doubt that the government will win the kind of unqualified victory that would justify sweeping remedies like splitting up Microsoft or forcing the licensing of its Windows programming code.
That is a key factor behind Microsoft's buoyant stock price, which has advanced 56 percent since the trial started. Investors are not ignoring the antitrust case, but it is currently a "back-burner issue," said Richard Sherlund, an analyst at
Goldman Sachs & Co. As a verdict nears, however, he said the company's shares could retreat $10 or $15 a share, based on worries about the outcome.
The real skittishness most likely will arrive if the government gets an opportunity to propose remedies. David Readerman, an analyst at Thomas Weisel Partners in San Francisco, said, "That's when investors will really be on the edge of their seats, watching the news wires minute by minute." |
