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Microsoft, DOJ back to court
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May 18, 2000: 5:30 p.m. ET
Latest filing largely expected; Street eyes court hearings next week
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NEW YORK (CNNfn) - Analysts and investors Thursday apparently regarded the government's response to Microsoft's remedy proposal in its antitrust case as an element of relatively minor importance.
Microsoft (MSFT: Research, Estimates) shares slipped 1-1/2 to 66-3/16, a 2.2 percent decline in thin trade.
Analysts said they are focusing on a more important part of the proceedings scheduled to begin next Wednesday, when the two sides are set to square off again in court to argue in support of their respective remedy proposals.
In documents submitted late Wednesday to U.S. District Court Thomas Penfield Jackson, the Justice Department and 19 states which filed the antitrust suit against Microsoft strongly defended their proposal to break up the company to prevent it from engaging in such behavior in the future.
Wednesday's filing, made in response to a series of changes to its business practices that Microsoft proposed as a remedy in the case last week, was the government's last effort to influence Jackson before the judge holds a court hearing in the Microsoft antitrust case on May 24.
 Some securities analysts have characterized each of the respective remedies as extremes, and most expected the Justice Department to stick to its guns. And many are recommending that investors wait until the shootout is over before putting any new money into Microsoft shares.
"Because of the uncertainties and the risks to our earnings model should any behavioral remedies be implemented, we continue to advise investors to stay on the sidelines until further clarity can be gained," Melissa Eisenstat, an analyst at CIBC World Markets, told clients in a research note Thursday.
Analysts told CNNfn on Thursday that investors should hold on to the shares they have, but were reluctant to characterize the declines as a strong buying opportunity.
"If you own the stock I'd certainly hold on," J.P. Morgan software analyst William Epifanio said in an interview on CNNfn's Ahead of the Curve program.
"If you don't own the stock and you want to buy some, you should buy if you don't think there's going to be a break up," Epifanio added. "I would hold off if you do think there's going to be a break up. But that's the real issue, and we don't know yet whether, you know, there's going to be one or not."
 As have most technology issues, Microsoft shares have been beaten up in recent weeks, with the developments in the antitrust case weighing them down even more. At Thursday's close, shares were off more than 44 percent from their 12-month high.
Ulric Weil, technology analyst at Friedman, Billings, Ramsey & Co., said he expects Jackson will take several weeks after the next round of hearings before he makes a decision, saying that a "buy on the dip" strategy is one that should be undertaken at this point only by risk-oriented investors. [286K WAV or 286K AIFF]
"There's a lot of game playing going on right now," Weil said. "The two parties are digging in the trenches, and digging in on their positions. The judge knows that Microsoft will appeal, and the tougher the penalties imposed on Microsoft by the judge, the more likely it is that the appeals court will modify them."
Regardless of Jackson's final ruling in the case, Microsoft executives said they plan to appeal, a process which some observers say could drag on for as long two years. 
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