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Author: oldblue64 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 156960  
Subject: The Big Picture Date: 9/6/2000 3:55 PM
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I've been a MSFT stockholder for about five years, and a Microsoft software user for longer than that. I've followed this case for years, and read one very interesting book on the subject ("Trust on Trial," by Richard McKenzie).

From my observations, I think there are several truths surrounding this case. I will also offer a few predictions.

The facts:

1. Microsoft's business practices are no different in their intensity and moral content than those of any other corporation, but they are the most exposed and examined in history.

2. The issue of "bundling" the browser is dead. Microsoft won at the appellate division, and the plaintiff did not appeal; end of story.

3. The Justice Department's behavior toward Microsoft can only be described as a political vendetta, led by a completely political White House operative by the name of Joel Klein, with strong backing from the entire Clinton administration. The interesting question is not whether this happened, but why it happened.

4. Bill Gates made a nearly fatal mistake in ignoring the political process, and in underestimating Washington DC's ability to hurt him. As recently as two years ago, he still did not rate the anti-trust case as among his top ten problems. This was a grievous error on his part, and one he was worked hard to correct in the past year.

5. Both political parties are in the extortion game, a fact John McCain has repeatedly noted. They depend on "soft money" that is extorted from large corporations, labor unions, and trade associations. The media is totally culpable in this corrupt process, since they are the primary beneficiaries of the money itself, which is spent on advertising during campaigns. Any major company within the American economy that refuses to play this game is vulnerable to attack, particularly if it has powerful enemies who are more than willing to use any and every means at their disposal to destroy it.

6. Microsoft's enemies include Oracle and Sun (Larry Ellison and Scott Mcnealy), who put repeated pressure on the politicians to eviscerate Microsoft so that their products, which were increasingly losing out to Microsoft's superior technology, would ultimately prevail. Since the first of the year, when the trial court ruled that Microsoft should be split in two, Oracle and Sun have both done extremely well at the same time that MSFT stock was about cut in half. This is exactly what Ellison and McNealy intended.

7. Penfield Jackson is a technological ignoramus, a completely biased judge, and a virtual stooge for the Justice Department. This will soon become apparent.

8. Microsoft never got a fair trial in Jackson's courtroom. It was a kangaroo trial from the beginning, but one that was aided - to Microsoft's detriment - by their own mismanagement. That said, even under the best of legal strategy, Microsoft had no chance, and the outcome would have been the same. It was a fix from the beginning.

Now, the forecast.

1. On Friday, after the close of the market, the Supreme Court will send the case to the First Circuit Court of Appeals in D.C.

2. On Monday, Microsoft will rally to around 75-80, perhaps higher.

3. As the appeal begins, it will be clear from the justices' questions that the court is favorably disposed to Microsoft, and hostile to the Justice Department. As this emerges, the media tone will begin to change, as various pundits realize that Microsoft is about to get a fair trial for the first time.

4. As the trial proceeds, and as Win2K and other products really begin to penetrate the market, MSFT stock will go on a serious run, ending the year around $120 a share. That will continue into 2001, and will go further when the court rules in Microsoft's favor. MSFT will have a 2-1 split in 2001.

5. Now comes the part that's harder to predict. The Supreme Court may indicate (very privately) that it wants the case for the purpose of reviewing the constitutionality of the Sherman Act, which they may rule has been unconstitutionality used to punish various companies on political grounds. If the SC wants the case, they'll get it, regardless of who is President. If they don't, I suspect the case will be finally settled on terms reasonably favorable to Microsoft, again regardless of who is President.

6. If the case ultimately goes Microsoft's way, SUNW and ORCL will begin to erode.
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