Microsoft Corp investors, who had already pushed the shares up 43 percent this year, said yesterday's antitrust settlement with the US Department of Justice validated their faith that the largest software maker would emerge with its growth prospects intact.
"It's a tremendous relief," said Larry Jones, chief investment officer of Durham, North Carolina-based NCM Capital Management Group Inc. Jones has been buying Microsoft shares this year as the company's legal prospects improved.
Microsoft is the best performer in the Dow Jones Industrial Average this year. Investors bought shares as the company sought to overturn a breakup order and settle the case on terms that didn't hinder growth and product development. The US accord, which lets Microsoft pursue its Web strategy and build new features into the Windows operating system, gave investors a new surge of optimism.
"As bright as Microsoft's future was before, it's even brighter with this," said Michael Holland, who manages the Holland Balanced Fund, a US$60 million fund with 4 percent of its holdings in Microsoft stock.
"The legal process will be more rational from now on and Microsoft will be allowed to compete."
Holland said he bought "a chunk of his holdings" after an appeals court in June overturned a breakup of the Redmond, Washington-based company and removed the judge who ordered it.
With the major US legal concerns out of the way, the stock may rise to the low US$70s, said Marc Klee, money manager with the US$800 million John Hancock Technology Fund, which holds Microsoft shares. The shares fell US$0.44 yesterday to US$61.40.
Bill Rutherford, principal of Rutherford Investment Management, said a large jump is unlikely in the next few months, because the stock has already risen on speculation that a favorable settlement would be reached.
"The market has been anticipating a settlement since the Bush administration came in," said Rutherford, whose firm has about US$100 million in assets and holds about 100,000 Microsoft shares. "I don't think it's a stock anyone would sell, but you can't expect a big run-up."
The 18 states suing Microsoft haven't approved the settlement, although three leading state attorneys general immediately praised the agreement. A judge said she wants the states to take a position by tomorrow.
The EU's antitrust investigation of Microsoft for dominating the market for software to run corporate networks is still in progress. The company is interested in settling that case as well, CEO Steve Ballmer said..
Because Microsoft holds such a large part of the software market, Holland said Microsoft still faces legal scrutiny. The settlement is just "an important mile marker" in Microsoft's legal marathon, he said.
Still, many investors say the worst is over because important concerns were put to rest.
The settlement won't require the company to make significant and immediate alterations to the Windows XP program that went on sale last week, as investors had feared. The required changes can wait for the first collection of bug fixes Microsoft releases.
More important to Microsoft's plans for the next several years, the company will be able to proceed with an Internet strategy that involves adding new programs and features to the Windows system that already runs 90 percent of the world's personal computers.
Investors were reassured that the settlement lets the company move forward with its plan, dubbed .Net, to develop Internet services that connect PCs, Web sites, networks and devices such as cell phones and organizers. The company started by adding such services to Windows XP and plans to reinforce that effort in future versions. Microsoft is pushing .Net as a way to boost sales as the PC market stagnates.
The resolution of the US antitrust case lets investors focus more closely on Microsoft's business. Investors say a slew of new product releases and the success of Windows 2000 for business computers and networks will lift sales in the next several quarters. The slowing US economy has sapped growth at corporate-software rivals such as Oracle Corp and PC makers that use Microsoft's software.
"I have no concerns with their legal problems that could overwhelm the very positive product space, with Windows XP, .Net, the success of Windows 2000," said David Brady, who helps manage the Stein Roe Young Investor Fund, which holds 600,000 shares of Microsoft.
The settlement does restrict some Microsoft behavior that even its own investors said had to change to "comply with the law."
Microsoft must let computer makers promote rival software by placing a link on the primary Windows screen to those programs. That could increase competition for Microsoft's programs that are included in Windows. Microsoft had previously used desktop links to bolster its own new products and compensate for inferior products.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique