Microsoft Corp., labeled a monopoly in a Friday antitrust trial ruling, survived a volatile Monday on Wall Street with better than expected results.
Analysts predicted after the antitrust ruling that Microsoft -- one of Wall Street's most prominent technology stocks -- would fall 6 percent in Monday trading.
Microsoft, which was added to the Dow Jones Industrial Average a week ago, closed at $89.94 Monday down $1.62, or only 1.8 percent from Friday's close.
While Microsoft shares fell slightly, some smaller, computer-related companies saw gains of as much as 70 percent in response to negative publicity surrounding the technology giant. Despite Monday's losses, analysts predict Microsoft will continue its trend of longterm growth, even if it is forced to settle under competition laws.
A settlement could mean loosening its licensing policies or breaking into smaller divisions.
At its lowest, Microsoft shares fell to $83.50 a share in early Nasdaq trading. More than 120 million shares changed hands, five times the average daily volume for the software company.
And the technology-heavy Nasdaq composite index skyrocketed more than 41 points Monday, closing at 3,143.97.
Two of the most profitable software developers in Monday trading on the technology index were Red Hat Inc., vendor of upstart Linux operating software, and Be Inc., an operating systems maker.
Red Hat closed at $104, up $18.06; Be Inc. rose 70.5 percent to close at $6.50.
"If there is a possibility that the monopoly that Microsoft has on operating systems will end, then these other companies may have the opportunity to compete on a level playing field," said Barry S. Wheeler, president of Wheeler Securities, a financial services firm based in Augusta.
Microsoft could appeal, possibly tying up the case for years, or settle by agreeing to certain penalties in a bid to cut its losses and eliminate the distraction.
It's that uncertainty that might have worked in Microsoft's favor on Wall Street. Notably, none of Wall Street's major investment firms issued an official downgrade on Microsoft's stock, and several analysts recommended buying the shares on weakness.
Some analysts predict if Microsoft settles by breaking into smaller divisions it could be profitable for shareholders. Experts point to cases such as the AT&T and Standard Oil antitrust settlements as encouraging examples.
Most say they are wary of such early predictions, however.
"I think what people are betting on is a settlement, but competitors still have to perform and some won't be able to," said John Puricelli, senior software analyst for St. Louis-based A.G. Edwards, an investment brokerage. "I just can't see that happening. All we're talking about here is intellectual property."
Microsoft, founded in 1975, is the world's largest software company. It generated 19.7 billion in sales during the 1998-99 fiscal year, and its stock has risen from 15 cents a share to more than $90 in its 24-year history, a trend that points to continued growth, brokers say.
"Microsoft is a very strong company," said Chuck Smith, an investment representative for Edward Jones' North Augusta branch. "While there may be some change in structure going foward, we still think Microsoft is one of the great companies in America, one that our clients should be owning."
Edward Jones re-evaluated Microsoft's potential for growth after Friday's ruling, Mr. Smith said.
And for now, the investment firm will continue to recommend Microsoft to investors as a strong performer.
Said Mr. Smith: "There's no reason to expect they won't continue to be a very solid performer in the technology area."
Associated Press reports were used in this article.
Reach Heidi Coryell at (706) 823-3215.
How some technology stocks fared Monday listed by company, close, change and percentage:
Amazon.com: 78, +13.06, 20.12
America Online: 149.75, +4.25, 2.29
Apple: 96.38, 8.06, 9.13
Be Inc.: 6.50, +2.69, 70.49
Microsoft: 89.94, -1.63, 1.77
Oracle: 59.44, +0.75, 1.28
Red Hat: 104, +18.06, 21.02