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Microsoft Stock Surges in Wake of Ruling

Times Staff Writer

Shares of Microsoft Corp. surged as much as 8% Monday and led a rally throughout the tech industry in the first trading day after the software giant won court approval of a deal settling the government’s four-year antitrust case against it.

The company also won a key ruling Monday in a federal lawsuit filed by Netscape Communications Corp., maker of the Navigator Internet browser.

Not all of Monday’s tech rally was attributable to Microsoft, analysts said.

Expectations that the Federal Reserve will cut short-term interest rates when policymakers gather Wednesday also helped the market.

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“Microsoft was the afterburner,” said analyst Robert Austrian at Banc of America Securities in San Francisco.

But analysts also noted that the rally faded toward the end of the day.

Late Friday, a federal judge in Washington upheld a settlement that Microsoft had reached with the Justice Department and several states in a case in which the company was found to be illegally maintaining a monopoly.

In upholding the agreement, the judge rejected a bid by nine states and the District of Columbia to broaden antitrust sanctions significantly, restrictions that Chairman Bill Gates had contended would have forced Microsoft to stop work on some core products such as the Windows operating system.

“For the most part, people got a sense that the judge wasn’t going to make radical changes in the settlement,” said analyst Brad Reback of CIBC World Markets in New York.

Microsoft’s rally actually began late Friday when news spread that the court had posted its opinion on a Web site 90 minutes before the close of trading. During that time, the stock rose from $52.22 to $53, with $90 million worth of stock changing hands in the final five minutes, Associated Press reported.

On Monday, Microsoft stock rose as high as $57.40 before settling back to close at $56.10, up $3.10, or nearly 6%, on Nasdaq. The stock still is down 15% year to date.

Gates, who owns nearly 627 million shares, saw his wealth jump by $1.9 billion Monday.

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Even many Microsoft competitors saw their stocks rise. One major competitor, Sun Microsystems Inc., slipped, losing 8 cents to close at $3.20 on Nasdaq.

Though the federal settlement has been upheld, Microsoft is still fighting price-fixing and restraint-of-trade claims filed by consumers and competitors across the nation.

On Monday, a federal judge in Baltimore denied Netscape’s request to hold Microsoft liable for damaging its browser business on the strength of the findings in the government’s case.

“It cannot be fairly said that the facts found in the government case are sufficient to establish Microsoft’s liability to Netscape,” U.S. District Judge J. Frederick Motz wrote.

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He said the government’s case didn’t produce evidence of specific harm to Netscape or other competitors, and that Netscape still must prove at trial that Microsoft’s illegal conduct hurt its business.

Motz, however, did adopt findings in the government’s case that Microsoft sought to exclude Netscape from the market.

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Bloomberg News and Associated Press were used in compiling this report.

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