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CNN Today

Government Prosecutors Moving to Recommend Microsoft Breakup

Aired April 24, 2000 - 1:01 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: One of the world's most successful companies may be broken up. A government source tells CNN that prosecutors are moving toward a recommendation Microsoft be divided into two separate companies. The federal judge who ruled earlier this month that Microsoft violated antitrust laws has asked prosecutors to come up with a remedy. CNN has learned they are discussing a plan to divide the computer giant into a Windows operating system company and a software applications business.

Stock prices fell sharply as the markets opened this morning, but later there was a partial recovery. The Dow is up about 30 points; Nasdaq is down about 184 points.

CNN's Steve Young joins us now from New York.

Steve, is the Microsoft reports that are circulating around causing this drag on the Nasdaq today.

STEVE YOUNG, CNN CORRESPONDENT: Well, Lou, it's certainly having a big impact; and as you noted, especially on the Nasdaq. Depending on the way the market's moving, they talk about it being tech-rich or tech-heavy. Today you'd say it's tech-heavy.

The doubts that are cast now over Microsoft's future as the government devises what to do is casting a bit of a pall over technology as a whole. But Microsoft is a part of the Dow 30, and even with Microsoft there in the Dow 30, the Dow, as you noted, is up almost 30 points. So you're seeing that the carryover is not influencing everything and, indeed, there are, you know, so-called old-economy stocks that are not getting walloped by this great anxiety.

WATERS: And the question's now being asked: Is this Microsoft breakup -- or at least the proposal for a Microsoft breakup -- a good thing or a bad thing for the consumers? And I heard some reflection this morning back upon when the phone company was broken up, that that was a bad thing.

YOUNG: Well, again, it depends on how you want to parse it. It turned out to be a good thing, actually, for investors if you take a look at the value of the parts because, in a breakup, with AT&T and with Microsoft, if that happens, investors in Microsoft would get pieces of the various units. Lucent alone -- Lucent Technologies -- when AT&T was broken up, has been a tremendous success story. But I think all of us can reflect back and recall how frustrating it was when the phone company was broken up and things that used to happen seamlessly became very frustrating and difficult to get through to various services. You never knew quite who to call.

The likelihood, if Microsoft is broken up, is that, at least in the short run, probably things that were efficient and familiar will become frustrating. But in the longer run, it could be that the Microsoft products will wind up being better because the competition may be even cheaper, and there might be new innovating things from other companies as well.

WATERS: All right, that's Steve Young in New York.

And now we just wait for the official announcement.

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