Microsoft wins antitrust settlement
In a move seen as a clear victory for Microsoft Corp, a judge Friday approved a settlement of the long-running antitrust dispute between the software giant and the US government.
News of the endorsement of the terms of the settlement agreed last year with the US Department of Justice sent shares in Microsoft soaring after hours and left analysts upbeat on the prospects for gains in the stock in next week's trade.
"The court is satisfied that the parties have reached a settlement which comports with the public interest," US District Court Judge Colleen Kollar-Kotelly said.
"Accordingly, the court will conditionally approve the proposed consent decree as the final judgment in this case."
The only condition the judge imposed on the settlement is that the two sides agree to give the court power to enforce the decree.
Microsoft founder Bill Gates welcomed the decision, calling it a "milestone," and vowed to comply with the terms of the settlement.
"We believe that settlement we have reached with the Department of Justice of the United States and the nine states represents a fair settlement of this case," he told a press conference at Microsoft's headquarters in Redmond, Washington.
"This settlement puts new responsibilities on Microsoft and we accept them. We will devote the time energy and resources needed to meet these new rules," Gates said.
The Microsoft chief said the company for now sees no reason for it to appeal the ruling.
"We're not seeing anything that would be cause for appeal at this time, but we need to make a full assessment" of the ruling, Gates told reporters.
Equity analysts were upbeat following the news and predicted shares in Microsoft will make solid gains on Monday.
First Albany analyst Mark Murphy told AFX News the ruling looks "extremely positive" for the company.
"This represents the removal of some major uncertainty; and the market never likes uncertainty," Murphy said.
Murphy expects the ruling to be met with "fireworks and a lot of jubilation".
"The stock is going to climb quite a bit on Monday," he said.
"I don't know if it will be (a rise) by one or three dollars, but it will be somewhere in that range."
Murphy said the stock, which he rates 'strong buy' with a target price of $67.0, is undervalued, but with money flowing into major mutual funds and back into the technology segment the latest development could represent a catalyst for the shares to stage a technical breakout.
Wit SoundView analyst Victor Raisys said the ruling was "better than what we were expecting".
News of the settlement left rivals and trade groups disappointed, however, with both AOL Time Warner Inc and Sun Microsystems Inc saying the battle to end Microsoft's monopoly was not ended by the settlement.
AOL Time Warner general counsel Paul Cappuccio said the ruling "made a weak settlement stronger" and the "effort to constrain Microsoft's monopoly has neither ended, nor been without result."
The AOL Time Warner lawyer said the settlement, however, "created some additional protections for consumer choice and competition."
"The Court and the Justice Department have pledged to monitor Microsoft's compliance with the terms of the judgment, and this should have some deterrent impact on its anti-competitive activity."
A lawyer for Sun Microsystems Inc said the settlement will be "ineffective" and difficult to enforce.
"The weak steps that Microsoft has taken to comply with the requirements already show that the settlement will be ineffective in curbing Microsoft's monopolistic and anti-competitive practices and how difficult it will be to enforce," Sun Microsystems special counsel Michael Morris said.
He also criticised "having Microsoft's own board members be the first line of compliance enforcement".
Morris called on the nine non-settling states to appeal Friday's ruling, saying he believes they have "ample" grounds to do so.
"Choice, innovation and competition form the foundation of the technology industry," he said.
"Today's ruling does little to advance these principles or to protect the millions of developers and businesses that want an open marketplace."
Morris added that Sun Microsystems still plans to co-operate with European Commission officials in their case against Microsoft.
Both the AOL Time Warner and Sun Microsystems lawyers said private lawsuits by their companies against Microsoft will continue.
Half of the 18 states suing alongside the federal government had refused to sign up to the proposed settlement and wanted Kollar-Kotelly to force Microsoft to offer a stripped-down version of its Windows operating system to give access to competing "middleware" such as internet browsers and media players.
Those states unsuccessfully argued tougher sanctions were needed to "unfetter" the market from Microsoft's monopoly abuses and to open up the market to more competition.
Kollar-Kotelly rejected their calls for stricter remedies
"Plaintiffs present little, if any justification, for these remedies and in most instances, these proposals are not supported by any economic analysis," she said.
The states said it was too early to say if they would appeal the judge's decision.
"I think we are still sorting it out," said Tom Greene, Assistant Attorney General for California, "it's far too early to decide whether an appeal is appropriate."
Microsoft argued in its written filings that the holdout states are attempting "market engineering" that may end up hurting consumers, and are mainly being pushed by Microsoft's competitors.
The states that rejected the government's settlement with Microsoft and have continued to pursue the antitrust case are - California, Connecticut, Florida, Iowa, Kansas, Massachusetts, Minnesota, Utah, West Virginia and District of Columbia.
Shares in Microsoft rallied in after-hours trade Friday following the ruling and were last quoted up $3.33 from their normal-hours close of $53.0. During the regular session, the stock had slipped $0.47 or 0.88%.
