Gates & Co. Are Living In Denial

In what some observers see as an ominous sign for Microsoft, the Justice Department announced last week that it has hired a veteran Wall Street investment banker as an advisor in its antitrust case against the software giant.

Both sides have been meeting daily with Richard Posner, chief judge of the 7th U.S. Circuit Court of Appeals, who agreed to act as a mediator after being chosen by Microsoft monopoly trial judge Thomas Penfield Jackson.

Despite the fact that both sides have remained mum about the progress of the proceedings, the hiring of the prestigious firm of Greenhill & Co. is being viewed by some observers as a sure sign that Judge Posner is seriously considering potential remedies.

Warning Was Clearly Sounded

Judge Jackson, who declared Microsoft a monopoly earlier this month, told lawyers that he might well delay the next phase of the case if settlement negotiations begin moving forward.

However, he also clearly warned all concerned that conservative jurist Posner is not someone to be trifled with by using any sort of delaying tactics.

“I don’t think that he is going to be prepared to waste a whole lot of time if it looks from the outset that it’s not promising,” said Judge Jackson in reference to a possible settlement.

Is Posner Just Saber Rattling?

While Microsoft has declined to comment publicly on the court’s move, it has been rumored that the company sees the action as just so much saber rattling.

If Microsoft is in fact taking this serious move that lightly, I think that the company is, once again, sadly mistaken. A team of Wall Street veterans from Greenhill will be able to quickly cut to the chase, giving Posner all the workable scenarios — including one that breaks the company up into several “Baby Bills.”

Optimism Fading Fast

I, like so many of Microsoft’s stockholders, had hoped that this case would quickly be resolved. Unfortunately, Bill Gates just does not seem willing to let that happen.

When Gates failed to come to the opening arbitration meeting last Tuesday, he sent a signal contrary to his recent conciliatory posturing.

Stonewalling All The Way

I have now come to the conclusion — especially in light of Posner’s action — that Microsoft has no intention of settling the case if it means giving even a fraction of an inch.

However, it boggles the imagination to think that, even after being declared a monopoly and facing the potential carving up of his company, Bill Gates has convinced himself that Microsoft has done nothing wrong and that the company can still somehow win this case.

Gates and his company are simply in a state of denial.

What do you think? Let’s talk about it.

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