Fool.com: Microsoft Vs. John Q. Public? (Breakfast News) November 9, 1999

BREAKFAST WITH THE FOOL

Tuesday, November 9, 1999

"What on Earth would a man do with himself if something didn't stand in his way?"
-- H.G. Wells

Microsoft Vs. John Q. Public?

By Richard McCaffery (TMF Gibson)

Fallout from Judge Thomas Penfield Jackson's statement of fact regarding Microsoft (Nasdaq: MSFT) continued today as some speculated that the real danger to the company could be a blizzard of lawsuits from consumers and competitors, The Wall Street Journal reported.

The threat of class action lawsuits from consumers and rivals -- the kind of swampy mess the tobacco industry is now wading through -- is Microsoft's primary reason to settle the case before Judge Jackson issues a final ruling, which is expected to come around the second quarter of next year.

Damages from plaintiffs claiming Microsoft abused its monopoly power to impede competition could reach into the billions, though it would be difficult to put a price tag on such claims.

Microsoft, with more than $19 billion in cash and short-term investments on its balance sheet and a market value of almost $500 billion, is a big target. The Journal reported that lawyers and corporate attorneys are already examining the judge's statement of fact to find leverage for possible claims.

The judge's early findings aren't admissible in private cases, but a final ruling would heap a burden on Microsoft that would be difficult to challenge.

It's important for long-term shareholders to remember, however, that at this stage of the game all of this hand wringing is speculation. Worst-case scenario game playing is the kind of exercise the media engages in, and, though it makes sense to think through the possibilities, nobody knows what will happen.

The judge has yet to make a final ruling -- if it even comes to that -- and neither Microsoft nor the Justice Department have proposed any settlements. To make a move based solely on the judge's recent statement, therefore, is highly speculative, and prepared investors don't make decisions based on guessing games.

News to Go

Life sciences firm Monsanto (NYSE: MTC) is considering selling part or all of the company in an effort to increase its stock price, and Swiss pharmaceutical firm Novartis AG (OTC: NVTSY) is a possible buyer, The Wall Street Journal reported.

Pharmaceutical company Pfizer (NYSE: PFE) said yesterday it expects earnings to come in at the high end of analysts' recently upgraded estimates for 1999. The company expects earnings of $0.83 to $0.85 per share. In addition, Pfizer expects 20% earnings growth next year. Pfizer also said it's still interested in pursuing its bid for Warner-Lambert (NYSE: WLA), a deal that would be immediately accretive to earnings.

Healthcare products manufacturer Johnson & Johnson (NYSE: JNJ) has reached an agreement to buy Innovasive Devices (Nasdaq: IDEA) in a stock deal worth about $85 million. The acquisition of Innovasive, which makes devices for sports medicine surgery, broadens Johnson & Johnson's line of surgical products. Innovasive shareholders will receive $8.25 in Johnson & Johnson stock for each share of Innovasive.

Newspaper, magazine, publishing, and broadcast company the Washington Post (NYSE: WPO) plans to repurchase up to 500,000 shares of Class B Common Stock at $575 per share. This is an 8% premium over the stock's closing price yesterday, and represents 6% of the company's outstanding publicly traded stock. The offer begins on Wednesday and expires Friday at 5 p.m. EST.

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