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

To: The Duke of URL© who wrote (33722)	11/10/1999 11:42:00 PM
From: taxman	Respond to of 74651

less than a week after a federal court called his company an abusive monopoly, Bill Gates faced his shareholders Wednesday, telling them the same things they've been reading in the papers the last few days. Though his public stance didn't change, Wall Street's oddsmakers began predicting a settlement. Microsoft is eager to end the sweeping federal antitrust lawsuit and would consider a settlement, the firm's chairman and chief executive told shareholders at the company's annual meeting in Belluvue, Wash. But the company won't budge on what he calls the "right to innovate." "We're willing to go a long way to address government concerns, but if we can't add Internet features, we can't add any new features," he said. Companies rarely use shareholder meetings to break news, and Gates' remarks represented no change from his position Friday night, when he first heard U.S. District Judge Thomas Penfield Jackson's findings of fact in the antitrust case. Several Wall Street analysts didn't bother listening. But now that they've had a chance to digest the findings released Friday, several analysts said a settlement seems probable, though not imminent. "The likelihood of a settlement is more likely than not now," said Peter Ausnit, analyst for Volpe Brown Whalen. "If they don't sort it out and the judge rules against them, they'll be operating under some sort of court-imposed structure." Ausnit dropped his rating from a strong buy to a buy after the findings were released. In his findings of fact, the first of three steps in a verdict in the case, Jackson said Microsoft used its domination of the software market to unfairly quash competition in the Internet browser market. The company maintains it is simply marketing ever-better software to stay competitive. Microsoft's bargaining position looks bleak now, but the pace of technological change could put the company in better shape if settlement talks develop, said Jeffrey Maxick, analyst for Madison Securities. Right now, "the government is in the catbird seat," said Maxick, who rates the stock a buy. But "the environment in which the suit was filed is going to be super different from the environment a year and a half from now." "The government at some point wants to show a win," he said. Maxick said he wouldn't be surprised to see a settlement in the spring or summer. If an agreement is reached, it would most likely involve the way the company markets its software, said Aaron Scott, an Advest analyst who rates the stock a buy. The judge described the marketing style as "predatory." "I'm pretty confident Microsoft will not give anything on the product side," Scott said. "That's what they do. They build products. They innovate." Analysts have envisioned scenarios wherein the company would be divided into separate firms to manufacture the operating system Windows; applications like Excel, the business software; and Internet applications like the Internet Explorer browser. None of the analysts quoted work for firms that have performed underwriting for Microsoft. Microsoft ended down 1 3/4 to 87 1/8. Copyright 1999 The New York Times Company regards