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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: EepOpp who wrote (31981)	11/5/1999 9:36:00 PM
From: Gerald Walls	Respond to of 74651

Jim Seymour at TheStreet.Com sez: =========================== Tech Savvy The Microsoft Decision: The Real Meaning of Internet Time By Jim Seymour Special to TheStreet.com 11/5/99 8:54 PM ET URL: thestreet.com You know the strangest thing about this jangly end to the Department of Justice's action against Microsoft (MSFT:Nasdaq)? At least, about this finding of fact, marking the end of the trial stage? The endgame has become so meaningless. We babble a lot about "Internet time." If ever anything should teach us about the pace of change in the e-world, and about how circumstances can change so much that something that once seemed massively important becomes peripheral, it ought to be this damned Microsoft trial. A year ago when this got underway, the computer industry was shaking with fear over the continuing dominance of Microsoft, whose Windows products were clearly going to control every computing device before long. A year ago Netscape and its future, and the market pressure Microsoft's (superior) Internet Explorer was putting on Netscape's Navigator browser, were big issues. A year ago, it looked as if whatever problems for its competitors were solved by the DOJ's attack on Microsoft -- and make no mistake about it, this was always an action in which the DOJ allowed itself to become a gladiator for the hard-case "Get Microsoft!" people, such as Oracle's (ORCL:Nasdaq) Larry Ellison and Sun's (SUNW:Nasdaq) Scott McNealy -- it would also set important and enduring guidelines for the entire industry. And today? Today, Microsoft and Windows are under assault on many fronts, and CEO Steve Ballmer is managing pulling in the walls at Fortress Redmond. Unix, in the form of its offspring Linux, has begun to get real traction in the business network operating systems market, and genuinely worries Microsoft's Windows NT product managers. A decent if unspectacular -- but free -- office-applications suite, Sun's StarOffice, is threatening Microsoft's lucrative Office 2000 franchise. Free "Web applications" from other corners look better and better -- have you seen Desktop.com? -- and are reminding us that we really don't need a Godzilla of a word processor just to write letters and reports. Windows CE still hasn't come to dominate the palmtop market, as 3Com's (COMS:Nasdaq) Palm division licenses more and more third-party hardware shops to use its market-leading Palm OS as a platform for pocketable computing devices. Today, Netscape is gone, R.I.P., a non-issue -- and not because of Microsoft. The company sold itself to America Online (AOL:NYSE) and Sun for a very nice gain, and except for a couple of software packages bought and tweaked by Netscape, now being sold by Sun, it's hard to find much evidence of Netscape's footprints. Lots of people still use Navigator, now of course owned by AOL. But heck, lots of people still use Lotus 1-2-3 version 1a and even Wordstar. So what? So-called "Net appliances" are about to get very hot. Free of "legacy" requirements -- that is, the need to run Microsoft Windows and Windows applications -- these boxes are about to appear in a dizzying variety of shapes, sizes, functions and prices. What they have in common: They connect quickly to the Web, without a Microsoft operating system or a Microsoft browser, and give their users complete access to the riches of the Web. Oh, and did I mention that there's no Microsoft software inside? Today, the buzz is not about Office 2000, nor even particularly about Windows 2000. The Linux flavors, principally those from Red Hat (RHAT:Nasdaq) and Caldera, are getting a lot of attention; Berkeley FreeBSD is still an immensely popular Unix variant. Those "Web apps" are attracting a lot of attention. Internet appliances are on the horizon. You tell me even one of those developments -- healthy, every one of them, I'd say -- which was driven or even aided by the DOJ's suit? Yet if at the outset of the DOJ's venture against Microsoft, I had written here that any of those conditions would obtain today, you would have immediately thought that could only have happened as an outcome of a successful DOJ action. You'd have been wrong, of course; The market brought all that about. You know -- that same market that the DOJ doesn't trust, that Judge Jackson obviously doesn't trust, the one that Microsoft allegedly so powerfully and utterly controls. Uh-huh. And remember -- this happened in just a year. Now tell me again about Internet time. More: Whatever Jackson finally comes up with as his proposed remedies, and whatever happens to that laundry list on appeal, does anyone really believe this decision, looking so far backwards, will form an enduring code, a case-law organizing principle that computer-industry companies will use, going forward, to guide their behavior? Of course not. Today, in Internet time, we realize that the outcome of any legal action can be viewed only in the context of the situation of that moment. And that with the ground constantly shifting under our feet, looking backwards to decisions such as this one -- ideas and outcomes formed in the crucible of a market and competitive environment no longer remotely the same -- is about as useful as looking at the calendar to see what the temperature is outside -- interesting, but hardly determinative. Indeed, it just may be that the most important legacy of this incredibly expensive foray by the Department of Justice against the real and imagined bad behavior of the boys from Redmond -- and make no mistake about it, bad behavior is very much in the DNA of some Microsoft managers -- will be that more of us in this country recognize that Internet time has simply become our time: the pace and rhythms of change which we have brought about, and by which we will now live. Did we really need this curious public entertainment to learn that lesson? Maybe. But I doubt it.

To: EepOpp who wrote (31981)	11/5/1999 9:42:00 PM
From: Gerald Walls	Read Replies (4) \| Respond to of 74651

Jim Seymour of TheStreet.Com futher sez: ================= Tech Savvy The Microsoft Decision: It Can Live With Business Limitations By Jim Seymour Special to TheStreet.com 11/5/99 8:57 PM ET URL: thestreet.com First of all, hold your horses. Remember that U.S. District Court Judge Thomas Penfield Jackson's opinion whether Microsoft (MSFT:Nasdaq) violated federal antitrust laws in the ways the Department of Justice has charged is just the finding of fact. We have a lot of process -- the parties' arguments, negotiation between Microsoft and the DOJ, potential remedies, the near-inevitable appeals -- before we get to the end of this messy trail. Second, you really thought it was going to be otherwise? Really? That Jackson, riding Microsoft hard throughout the testimony phase of the trial, was gonna let 'em off? Still, and only at first reading -- I literally just got my hands on the judge's findings -- it seems to me that Microsoft has a tougher row to hoe than most trial observers and analysts expected. Including this one. This is what hurts the most: Judge Jackson found that Microsoft had acted as a monopolist, which can be used in the remedy phase to propose limits on its operating discretion. He also says Microsoft used its power and profits to stop competitors, effectively deterring others' investment in competing technologies. That lays a basis for finding that Microsoft's actions have hurt consumers -- an absolutely essential finding for a tough remedies ruling in a few months. There is tough, tough language in the opinion. Even so, those findings are well short of what Microsoft could have had to deal with. But they're still worse than the Microsoft team expected. Could it have been otherwise, given Jackson's obvious dismay with Microsoft's feeble defense during the trial, evidence gaffes (remember the bad video presented during Microsoft VP Jim Allchin's testimony?) and classic bad attitude? After Bill Gates' simply horrible video testimony, when it seemed he couldn't remember what he'd had for breakfast? Clearly, some of what Microsoft did was anticompetitive. And, of course, some of its actions do look bad and smell funny (read: monopolistic). No one I know expected the judge to deny the obvious. What Microsoft most feared, I think, was an even more Draconian, harder-to-deal-with finding of fact. It has, at least, dodged that. For now. Look for the DOJ to make much, in press conferences later tonight and over the next few weeks, of the structural relief it will demand and which it will say is justified under Jackson's findings. But defendants don't "win" antitrust cases in the conventional sense of the word, just as defendants in criminal trials aren't found "innocent," only "not guilty." In antitrust, you win by limiting the scope of the loss. By that test: -o- This doesn't smell to me like a finding that is going to lead to a judge's demands for a corporate breakup. Count that as a Microsoft win. -o- This doesn't smell to me like a finding that is going to lead to a judge's demand to peel Internet Explorer out of the current version, let alone next year's version, of the Windows operating system. Count that as a Microsoft win. -o- This doesn't smell to me like a finding that is going to lead to a judge's substantial financial penalties. Count that as a Microsoft win. -o- This does smell to me like a finding that is going to lead to a judge's proposed remedy of imposing an IBM (IBM:NYSE)-like consent decree: Microsoft can't do this anymore, or this, or this. Count that as a Microsoft win. Huh? Microsoft wins if forced to sign a consent decree? You bet. Because like the long-lasting IBM decree, a 40-year war that ended only in May 1997 and was supposed to level the field for other mainframe makers, a consent decree won't have that much effect. It'll be easy for Microsoft to re-game the situation, to find ways to work around the bans. And remember, even the IBM consent decree, the most Draconian and long-lived in the history of American jurisprudence, failed utterly to effectively restrain Big Blue and to foster greater competition in the mainframe market. When it was finally lifted two years ago, IBM still had 80%-plus share of the mainframe market. So, for Microsoft, if Jackson's findings of fact do lead to a remedy based on a consent decree, that's going to be a relatively cheap and easy document for Microsoft to sign. Microsoft won't make it sound so easy, of course. There will be loud complaints, and furious statements and claims that a limitation on its ability to compete is both fundamentally unfair and also unworkable. The real risk from this point on is that the DOJ doesn't let Microsoft negotiate down the harshness of potential remedies, that the unexpected breadth of the findings of fact give credence to a tougher remedy from Jackson this spring. That said, remember what I said when I first wrote here about this trial almost a year ago: Microsoft's game plan had to be losing at the trial, limiting damage along the way and then winning on appeal. It's clear there is support on the appellate bench for limiting Microsoft's penalties. Even if Jackson's final decision is pushed rapidly and directly to the U.S. Supreme Court, where opinions may not yet be fully formed, I doubt that the justices would support remedies that get into dismembering today's Microsoft -- or worse. It ain't over 'til the fat lady sings. And tonight she's not even onstage.