Panel Vacates Microsoft Breakup
Just
as you don’t have to be Kaidanov to understand basic chess strategy, you
don’t have to be a member of the Supreme Court to understand that the US
Appeals Court’s ruling will have a significant impact on Microsoft and the
entire tech sector. In ruling that Judge Thomas
Penfield Jackson made egregious
and repeated errors in his ruling, the Appeals court overturned
a ruling splitting Microsoft
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into two companies, while upholding a judge’s finding that the largest software
company illegally defended its Windows monopoly.
The seven-judge panel disqualified U.S. District Judge Thomas Penfield Jackson
from the case, calling comments he made to reporters “offensive.” From
my reading, they overturned Judge Jackson’s order to split the software maker
because that split was due to findings that have now been reversed.
“Therefore, the remedial order as currently fashioned cannot stand,” the
court said.
The government tried to keep up appearances, but they know this was a damning
blow. “We are pleased that the court of appeals found that Microsoft had
engaged in illegal conduct to maintain its operating system monopoly.” That
said, the panel found that Microsoft broke the law when it restricted computer
makers like Dell from changing the way the Windows operating system was
displayed when users turn on their machines. I’m sure MSFT isn’t willing to
concede that point, but it’s hardly enough to break up the company, or induce
a multi-billion dollar settlement.
It
was deafening in the Microsoft options pit when the ruling was released, but as
happens so frequently in time-sensitive cases, some wise guys seemed to know
moments before the ruling came out. I don’t want to sound like a cynic, I’ll
leave that to Benjy, Tom Haugh, Larry Parkhill or Goran Yordanoff, my guests on "Doctor
J & the Traders" (www.webfn.com,
Thursdays at 4:30 CT). Therefore, I’ll call it an astonishing coincidence
that thousands of MSFT calls, and millions of shares of the underlying stock
were purchased just before that news broke. Some skeptics may call those trades
fast money, insider pickoffs; others may call it good fortune. Either way,
it’s like my high school football coach used to say, "I’d rather be lucky
than good."