DOJ fails to make Microsoft's Year in Review

US District Judge Thomas Penfield Jackson, the US Department of Justice (DOJ), the court-ordered breakup of the company and the revenue downturn are topics that failed to make Microsoft's year in review.

          US District Judge Thomas Penfield Jackson, the US Department of Justice (DOJ), the court-ordered breakup of the company and the revenue downturn are topics that failed to make Microsoft's year in review.

          Nowhere in the 12 month of 2000 review are words that speak of legal battles or Jackson's order that Microsoft be split into one company focused on operating systems and a second on other software applications. There are no words in the review, which is posted on the company's Web site, that talk of an appeal of Jackson's ruling that will stretch well into 2001.

          When Microsoft thinks of highlights for the year, the company does not think of the trial, said spokesman Jim Cullinan. He said that does not mean that the company does not acknowledge the trial's significance, but it is not something that is dwelled on.

          "They are focused on Whistler" and other products, he said, referring to the company's latest operating system. "It (the trial) is an issue that is being dealt with by a very small group. It is not something that the 42,000 employees of Microsoft dwell on every day."

          Jackson in April ruled that Microsoft had broken various federal and state antitrust laws and had acted in an anticompetitive manner to try to monopolize the Web browser market. In its year in review, no mention of the ruling is made. Microsoft speaks of its official launch of its Pocket PC in its April summary.

          Then in June, Jackson gave his remedies ruling for the trial, ordering the Redmond, Washington, company split into two. Microsoft showcases its Washington2Washington program in its year in review for the month. The initiative during 2000 and 2001 will link school children in Washington state and Washington D.C. The goal is to demonstrate how students can use computers, digital camera, video digital cameras, Pocket PCs and a dedicated Web site, according to Microsoft.

          The DOJ's case against Microsoft has widely been viewed as one of the most significant anti-trust cases in U.S. history. It is the first involving a major IT company in which the court is reviewing how major software vendors do business and how they deal with competitors. It also highlights intellectual property issues.

          One financial analyst who monitors Microsoft, however, suggested why the Microsoft antitrust trial should not take top billing for 2000.

          "I would say it hasn't been the most significant event," said Ruairi O'Neill, an equity analyst for PNC Advisors. "You had Microsoft take down revenue expectations in March and April. ...There also was the more recent revenue downturn. That (the revenue downturn) basically superseded the legal issues."

          There is no mention of a revenue downturn in the annual review. The most recent downturn was announced Dec. 14 when Microsoft warned that it would not meet expectations for its second quarter, ending Dec. 31. Microsoft's warning was only the second time the company has changed its guidance for a quarter during the 14 years it has been publicly traded. The other time came in 1989.

          For its second fiscal quarter ending Dec. 31, Microsoft expects revenue in the range of US$6.4 billion to $6.5 billion. These figures translate to between 46 cents and 47 cents per share in diluted earnings. Analysts polled at First Call/Thomson Financial predicted the software-maker would make 49 cents per share for the quarter. On Thursday, Microsoft shares rose US$3.06 or 7.05 percent to $46.50 a share in midday trading.

          As for the future, O'Neill said that, assuming the company is not broken apart, it will be crucial for Microsoft to transform itself into a company more focused on the Internet and related applications. Microsoft, in June, announced its .Net architecture, which is a platform developers can use to create Web services.

          Looking into 2001, the DOJ will file its next brief in the appeal of the antitrust case ruling on Jan. 12 and Microsoft will file a reply brief on Jan. 29. Final briefs will be filed on Feb. 9. Oral arguments will then take place on Feb. 26 and 27.

          Microsoft, in Redmond, Washington, can be reached at +1-415-882-8080 or http://www.microsoft.com/. The DOJ, in Washington, D.C., can be reached on the Internet at http://www.usdoj.gov/.

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