Nasdaq Halts Microsoft Trading for 3 Hours

TIMES STAFF WRITER

Trading in Microsoft Corp. stock was suspended for more than three hours Thursday as the Nasdaq Stock Market imposed an unusually long trading halt to give investors time to pore over the appellate court decision.

Trading was halted from 8:32 a.m. PDT until 11:50 a.m.

The stock surged about $3 in the moments immediately after the court decision was reported by news services, before Nasdaq quickly halted activity.

When trading resumed, the stock jumped to $76.15, then fell back. It closed up $1.60 at $72.74. Volume was heavy, with almost 65 million shares changing hands. Even with the trading halt, that was about 50% higher than the stock's average daily volume this year.

Nasdaq often freezes trading in individual stocks to let investors assess potentially market-moving news, spokesman Wayne Lee said. But such halts normally last only about 30 minutes, he said.

The extended Microsoft trading freeze ensured that the court decision was "adequately disseminated" to all investors, Lee said.

Traders speculated that Microsoft may have asked for the trading halt, but a company spokeswoman said that was not the case.

Nasdaq has historically been known for having far fewer trading halts than the rival New York Stock Exchange.

Nasdaq was criticized by some traders in March when it suspended trading of Yahoo Inc. shares for almost an entire day preceding a company announcement that it would name a new chief executive.

But some traders reacted calmly to the Microsoft trading halt.

"I don't feel it had any negative implications on the marketplace," said Bill Yancey, equity trading chief at Southwest Securities in Dallas.

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The Market's Votes

Microsoft stock has risen 68% this year, far outdistancing shares of major rival AOL Time Warner. Meanwhile, two other rivals--Oracle and Sun Microsystems--still are down sharply this year.

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Year-to-date change in share prices

Microsoft: +67.7%

AOL Time Warner: +49.7%

Oracle: -34.0%

Sun Micro-systems: -44.0%

Source: Bloomberg News

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The Stock: A Long-Term View

Microsoft shares plunged in 2000 with the general collapse of technology stocks, but the stock has rebounded this year. At the start of the 1990s, Microsoft sold for a split-adjusted $1.20 a share.

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Microsoft, quarterly closes and latest on Nasdaq

Thursday: $72.74, up $1.60

Source: Bloomberg News

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Earnings Expectations for Key Tech Firms

Microsoft is expected to earn $1.79 a share in the fiscal year ending this week, up slightly from the last fiscal year's results. The company's relative earnings strength--in a period when earnings of most major tech companies are falling--has helped lift its stock. Here are analysts' consensus earnings per share estimates for major companies' 2001 fiscal years and the stocks' price-to-earnings (P/E) ratios based on those estimates.

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Stock Est. Ticker Thurs. change 2001 Est. Company symbol close YTD EPS P/E Microsoft MSFT $72.74 +68% $1.79 41 Apple Computer AAPL 23.54 +58% -0.23 NA AOL Time Warner AOL 52.08 +50% 1.23 42 Intel INTC 29.64 -1% 0.54 55 Hewlett-Packard HWP 27.25 -14% 1.06 26 Oracle ORCL 19.18 -34% 0.44* 44 Yahoo YHOO 19.38 -36% 0.04 485 Sun Micro SUNW 15.60 -44% 0.42 37 Cisco Systems CSCO 18.58 -51% 0.41 45 EMC EMC 29.45 -55% 0.77 38 S&P; 500 1,226 -7% 53.76 23

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* actual earnings for fiscal year ended May 31

NA - not applicable

Source: Bloomberg News, Times research

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