SAN FRANCISCO (06/08/2000) - D-Day finally arrived in the Microsoft Corp. antitrust case yesterday, but technology investors didn't mark the event with any great interest in the stock market. The government made it no secret that the remedy ruling, which was made public 30 minutes after the market's close, would call for Microsoft to be split into two separate companies. Investors demonstrated their reaction with a shrug.
Microsoft shares closed up 88 cents, or 1.26 percent, to $70.50. Just more than 36 million shares traded hands yesterday, down from Tuesday's volume of 49 million. The expected ruling had a favorable effect on technology shares in general. After dipping slightly in early-hours trading, the Nasdaq surged at the end, closing the day up 82.89, or 2.21 percent, at 3839.26.
The Dow closed up 77.29, or .72 percent, at 10812.86. Although this is the final judgment made on the government's part, Microsoft has made it clear that it expects to final an appeal. The expectation that the end result could still be months down the road likely played a part in the light volume in Microsoft trading yesterday. "I don't think you can draw the conclusion that the ruling had anything to do with the strength in the tech sector yesterday," says Paul Dravis, equity analyst for Bank of America Securities covering Microsoft.
"There is an understanding that the appeals process will go on for a while."
Shares of many Microsoft competitors rose while waiting for the breakup ruling.
Red Hat, which makes software for the Linux operating system, surged $3.69, or 17.51 percent, to $24.75. Other competing technology companies, including Sun Microsystems, Oracle, Apple Computer and America Online, saw healthy gains yesterday. In after-hours trading on The Island ECN, Red Hat and Corel Software were among the most actively traded. They both were down slightly, while Microsoft was trading up more than a point to $71.75.