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Strategies & Market Trends : The Art of Investing -- Ignore unavailable to you. Want to Upgrade?

To: Sun Tzu who wrote (308)	11/19/1998 8:57:00 PM
From: Bret Savage	Read Replies (2) \| Respond to of 10713

Hi Sun, I think your argument to short MS long-term rests on one fundamental assumption - that losing the lawsuits will adversely affect the value of the company. Examine the history of similar situations, though. AT&T went through this, as did IBM, with varied outcomes. With IBM, it wasn't the gov't that laid them low, it was their own missteps later. In the extreme AT&T-like case of MS getting split up, I'd wager that the sum of its parts will actually exceed the whole, and it might be the best thing to ever happen to an MS shareholder. Their combined premiums would easily exceed the "monopoly premium" IMO. I also think most holders of MS do little trading. It sits in their accounts, piling on the boring 40-80% a year like a mutual fund on steroids. When it dips, they buy. If you actually split up MS? Viola! You now have a mutual fund made up of amazingly successful software companies. I admit to my own ignorance of exactly what happens to your shares in this scenario... anyone care to fill us in? I agree that MS has never been an innovator. The brutal truth is that incompetence of their competition guarantees their continued success. The Novells, Corels, Lotuses and Borlands just aren't there to exploit any opportunities, so the legal troubles will have zero effect on the sales of their software. Therefore, the lawsuits will just create buying opportunities, since the revenue reports will bring the stock roaring back, with shorts only adding rocket fuel. This would be a dangerous short IMHO... I look forward to reading other opinions on this... it's an interesting subject! :-) Bret P.S. The Sun suit will have no effect at all on MS, other than to hamper their efforts to fragment Java. I'd bet they have compliant software produced and ready to go "just in case". As a Java developer, I'm very happy by the court's decision, BTW :-)