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

To: Sir Francis Drake who wrote (22539)	5/11/1999 9:45:00 PM
From: RTev	Read Replies (5) \| Respond to of 74651

SFD, I believe that the political climate around the two issues is so different that it's virtually impossible to compare the tobacco settlement with the Microsoft trial. They're also very different kinds of cases that will lead to far different results. Political climate. Tobacco is now the second most scorned substance in America after the other drugs that are deemed illegal. It is (or at least was perceived to be at the time) a politically popular stance to destroy the companies that sell the stuff, to greatly increase the cost of the product for consumers, and to bring financial harm to "those who have profited from this scourge," as a politician might put it. Despite the trial, Microsoft still seems to be a popular company with the public. A state attorney general running for office would have a difficult time justifying the same kinds of company-destroying tactics used in the tobacco talks. Rather than crowing about the huge damages, an AG will want to be able to say something like, "We have opened the competitive landscape so that the consumer will have greater choice in the future, and so that our local XYZ Tech Co. will have an equal chance to compete. This trial resulted in a great win for the people, the workers, and the businesses of our great state." In answer the a question about the effect of the trial on MSFT stockholders, the AG will want to be able to reasonably say, "We believe this is a great win for Microsoft stockholders because the company will grow and prosper as it competes in a fair and open market." You'll find many AGs and others who were happy to call the tobacco companies "evil". Except for a few particularly rabid proponents of other technologies, one rarely finds that term applied except in jest to Microsoft (aka Evil Empire). Nature of the cases. In the tobacco talks, the companies were accused of producing and marketing a product that they knew would cost millions of dollars in health claims. The companies faced scores of expensive private lawsuits if they didn't do something to stop them. From the beginning, that case sought financial damages to compensate the states for what they claimed were actual damages, along with punitive damages designed to cause real financial harm to the companies. Although the shape of the relief in the Microsoft trial could take the form of financial damages, few have suggested it should. Even when the state attorney generals leaked their list of preferred remedies they did not emphasize financial damages. Virtually all the measures in that list sought structural changes. Recall also, that the AGs claimed to seek a solution that were not cause significant harm to MSFT shareholders. Other suggestions usually focus on either structural change or regulation. Scott McNealy is one of the few who has suggested any kind of financial damage fee should be awarded. Another note: nobody is accused of any "crime" here. This is a civil case and not a criminal case. This case could, however, lead indirectly to significant financial penalties. Those could come from any of the private suits that would probably filed in response to a loss in this case. The Caldera case that's currently in pre-trial stages is an example. Caldera's case rises from the anti-trust charges covered by Microsoft's 1995 consent decree. Similar cases asking for hefty financial damages might arise from this case as well.