Article 113 of 200
Niles Lathem
New York Post
Page 36
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 capitalization.

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 personal computers.

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 afford.

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 company."

But he said Microsoft would prefer to be using the money it is spending on legal defense on development of new technology.


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