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Federal Judge Expected to Rule Strongly Against Microsoft in Antitrust Case; Financial Markets Reacting to Verdict

Aired April 3, 2000 - 2:05 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

LOU WATERS, CNN ANCHOR: The federal judge overseeing the Microsoft antitrust case says he will issue his verdict today. It's expected to come down after the markets close for the day, perhaps around 5:00 p.m. Eastern this afternoon. Based on the findings of fact released last November, the verdict is expected to rule strongly against Microsoft.

CNN Justice correspondent Pierre Thomas joins us now from Washington.

Pierre, what can we expect?

PIERRE THOMAS, CNN JUSTICE CORRESPONDENT: Well, Lou, you recall back in the fall the judge ruled that Microsoft is, in fact, a monopoly and that they engaged in practices that hurt consumers and their competitors. What we expect the judge to do today is to say whether they, in fact, violated antitrust laws.

Now, if he does rule that they violated antitrust laws, in a few weeks or a couple of months you can expect the judge to begin to rule on what the penalty should be. Now, that's the very important factor there: penalties. He could rule that Microsoft could be broken up. That's one of the options that he would be able to look at. But it's not quite clear exactly how far the judge will go, although the early indications are that the judge feels strongly that Microsoft is a Monopoly and hurt consumers and their competitors.

WATERS: And there are already early indications also, are there not, Pierre, that Microsoft won't stand still for any of these potential remedies?

THOMAS: Well, one of the things we're hearing from sources, that if the judge's ruling comes down the way we expect it today, the likelihood of an agreement is almost nil, that the incentive for the Justice Department to work out a deal was before the judge's ruling. So now you can expect both sides to dig in. And also you can expect a very protected legal argument. The next court would be the court of appeals, and this could potentially go to the Supreme Court in the same way that you saw the mob bail controversy a couple of decades ago.

WATERS: All right, Pierre Thomas continuing to follow the Microsoft story. And we're expecting to hear more on this developing story later on this afternoon -- Donna.

DONNA KELLEY, CNN ANCHOR: That's right. The Microsoft ruling, though, is still just a few hours away, but it's already having an effect on financial markets.

CNN's Charles Molineaux is joining us from the Nasdaq -- Charles.

CHARLES MOLINEAUX, CNN CORRESPONDENT: Yes, Donna, we're looking at a real weak performance by technology stocks. Within the past hour, we actually saw the Nasdaq composite drop down below the 4300 level. That is considered a crucial support point. Got all the way down to 4226. Right now, it's down by 238 points at 4334. So a very weak performance.

Microsoft, for its part, is now down by $14. That is roughly where it has been all day. But its weakness is spreading throughout this market. We see industrial stocks down by 5 percent, insurance stocks are down, financials are down by 2, telecoms down by 4 1/2. Banking stocks are gaining, but computer stocks are leading this market lower. They're down by 6 percent. Transports are off and biotechs are down by 3. Internet stocks are actually off by 7 percent on the day today.

And we see this weakness is generally being blamed on Microsoft, but a lot of market strategists say we're also seeing selling as the weakness in technology stocks does persist. There is something of a reallocation going on. Investors are selling some of these big growth stocks, some of which are speculative, and once again buying what are considered value stocks, stocks that look like they have more opportunity to grow going forward, but the more traditional names.

Microsoft, however, being looked at as the major culprit in this sell-off on the day today. Keep in mind the Nasdaq has seen a lot of weakness. It's off four straight losing days last week, only managed to pull off a gain on Friday. And at this level, the Nasdaq is well at the -- well into what is considered a correction. That is a 10 percent decline from the market's highs. Right now we're 4336, so the Nasdaq composite -- again, mostly technology stocks -- is looking extremely weak. And we're very close to our session low.

I'm Charles Molineaux reporting live from the Nasdaq Marketsite.

KELLEY: Charles, thanks.

A quick update on the numbers: Nasdaq down 237 and the Dow up 210.

We will have live updates from Wall Street in this newscast, and of course "STREET SWEEP" will have full coverage of the impact that the Microsoft ruling has on the markets, including an interview with "Fortune" magazine's Joe Nocera. That comes your way at 3:59 p.m. Eastern time. The ruling is expected to be around 5:00 p.m. Eastern, and CNN will bring you special coverage when that happens.

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