Investors in US software giant Microsoft face an uncertain period following the legal decision that it used monopoly power to harm consumers. Microsoft shares are expected to come under pressure when the US market opens today, with analysts predicting a sharp fall in the price as the markets react to Friday's ruling.
Microsoft, which employs 1,500 in the Republic, insists the ruling will have no immediate impact on its operations here. Mr Kevin Dillon, the Dublin-based manager of its European operations, said it was the first step in a lengthy process and would not interfere with business.
In after-hours trading on Friday, Microsoft shares tumbled from a closing price of $91 (€69) to $87, wiping $20 billion off the firm's market value, with shares likely to weaken further today.
The ruling has left experts divided about whether the company should focus on appealing or cut its losses and enter settlement talks that may lead to its break-up. There are also concerns that it could open the way for an EU examination of Microsoft's operations in Ireland and Europe.
Yesterday, the US Justice Department and Microsoft talked about an eventual settlement, but their comments about the ruling by Federal Judge Thomas Penfield Jackson underscored the chasm between them.
The next phase of the case is to decide if Microsoft has liability. If so, the court would decide how to remedy the problem, possibly even breaking up the company. The two sides have had settlement talks in the past, but they broke down more than a year ago. In appearances on television talk shows yesterday both parties expressed an interest in a renewed settlement effort, but found no common ground.
Mr Joel Klein, the head of the Justice Department's anti-trust division, said Judge Jackson's ruling would have to be the foundation for any settlement. "We would need a settlement that deals with the very findings that the court made in this case - a settlement that protects consumer choice, innovation and competition," he said.
But a top Microsoft executive said Judge Jackson's "finding of fact" did not "adequately reflect" the software giant's understanding of the industry, and he looked toward a possible vindication in an appeals court.
"The incidents that were described and the judge summarises we believe don't adequately reflect the competitiveness of this industry and the innovation of this industry and we think eventually that will be born out," said Mr Bob Herbold, Microsoft's chief operating officer.
He said Microsoft experienced earlier setbacks before the ruling, but "eventually the courts came out on the side" of Microsoft. In 1998, an appellate court reversed a ruling by Judge Jackson in making it clear Microsoft had a right to design products as it saw fit.
In Friday's ruling, the judge laid out his findings of fact, saying which testimony and exhibits he found credible and convincing. Legal experts say such findings are difficult to reverse on appeal.
While saying settlement was "always an option", Mr Klein said on television that after the judge rules on the liability phase of the case, "we look forward to a phase with respect to remedies". Mr Herbold responded: "There is nothing we would like more than to settle this case. We've been saying that from day one."
Several newspapers have reported Microsoft's increased lobbying efforts. The Washington Post reported recently that Microsoft lobbied Congress to cut funding for Mr Klein's antitrust division. The New York Times reported yesterday that the firm's spending on lobbying doubled last year to $3.74 million. Mr Herbold said yesterday it was "important that we participate in the political process".
--(additional reporting Reuters)
