Article 113 of 200
OH, NO, MR. BILL! LEGAL TAB MAY TOP $6 BILLION
New York Post
Copyright (c) 2000, N.Y.P. Holdings, Inc. All rights reserved.
Microsoft's epic antitrust slugfest with the federal government
could cost the software giant a whopping $6 billion in legal fees and
settlement costs over the next few years, industry experts say.
The staggering costs of defending itself against government
antitrust charges and a series of class action civil lawsuits that are
expected to follow are just a few of the many woes facing Microsoft,
for two decades the most successful high-tech company in the world, as
it battles in federal court against a break-up.
Legal and industry experts say the recent declaration by Judge
Thomas Penfield Jackson that Microsoft violated antitrust laws has set
off a chain reaction of legal implications that could distract Bill
Gates and other top company officials, disrupt business and tie the
company up in courts for years - even if Microsoft wins its appeal.
Microsoft's Wall Street lawyers said in legal papers filed before
Jackson this week that the Justice Department's break-up plan hangs
over the company "like the Sword of Damocles."
Since the breakdown in settlement talks in March the company has
suffered a $40 a share drop in the value of its stock and, this year
alone, the company has lost over $250 billion in market
Company lawyers also warn that talented employees and potential
Microsoft business partners may bolt because of the pending break-up.
All this at a time when Microsoft rivals are forming powerful
alliances - like the AOL-Time Warner deal - and a new generation of
technologies are being developed that are less reliant on Microsoft's
Windows Operations system that powers 95 percent of the world's
Nicholas Economides , dean of New York University Stern School of
Business, who hosted a recent conference on the implications of the
Microsoft lawsuit, predicts that the antitrust case will eventually be
settled during a new presidential administration without having to
break up the company.
But by then, he predicted, the legal costs to Microsoft - which
has hired armies of high priced lawyers, lobbyists, advertising
executives and public relations specialists to help defend itself -
could easily top $6 billion.
"And that's a conservative estimate. That's assuming that the
civil lawsuits against Microsoft are only moderately successful,"
Economides told The Post.
Although the legal costs could be worth more than the total value
of most companies, it is a price tag that Microsoft - which reportedly
has cash reserves estimated to be almost $20 billion - appears able to
Microsoft spokesman Jim Cullanin disagreed that the costs of
disposing of what he called "rhetorical" consumer lawsuits will be as
high as Economides and others predict.
Cullanin refused to disclose Microsoft's legal costs, which he
said are built into the annual budget "just like every other big
But he said Microsoft would prefer to be using the money it is
spending on legal defense on development of new technology.