Who can I sue to get my money back? By my conservative estimate, I've lost more than $25,000 since the Department of Justice urged the breakup of Microsoft Corp., so much has the price of the stock dropped. Most of that is in an index fund investment in our company's profit-sharing plan.
Other 401(k) plan participants, and individual investors with money in index funds or other broadly diversified or technology funds, not to mention those with direct investments in Microsoft, also have been hard hit. The proposed break-up plan, likewise, has taken billions of dollars from the pension funds that secure millions of workers' retirements.
No doubt the Justice Department, and the state attorneys general who joined in pushing for the breakup, will claim this is only a short-term loss and that the shareholders all will prosper once Microsoft has been tamed.
I don't believe it. As far as I'm concerned, the breakup of Microsoft will not work out as planned; the outcome will be negative for the company, for investors, and for the economy.
The plan starts out with four strikes against it. Three strikes usually mean you're out, but not when you're dealing with the government and federal judges.
* The first strike: The government usually messes up anything it touches. The Microsoft plan will be no different.
The state attorneys general who joined with the Department of Justice in demanding that Microsoft be broken up declared the move would not harm shareholders and in the long run would be good for them.
Ha! The market clearly is not so sanguine about the supposedly benign effect on the company. It has cut the stock price almost in half.
Every 401(k) participant with money in an index or actively managed fund that owned Microsoft shares should vote against his or her state attorney general in the next election -- if that attorney general joined the federal government action against Microsoft. That's the only way to get even.
* The second strike: Lawyers designed the breakup plan -- government lawyers and hired guns. Lawyers aren't interested in doing the right thing. They're interested in winning for their side, even if it destroys something of value. Lawyers generally are destroyers, not creators; consumers, not producers. They're in it for the sense of power and glory, and enhanced legal fees. Most lawyers, especially government lawyers, know nothing about business. Judges know even less.
* The third strike: A few economists agreed it would be good for the economy. That alone should be the kiss of death. When have academic economists ever gotten anything practical right?
* The fourth strike: The investment bankers hired by the government to determine if the breakup plan was doable and was a good one found -- surprise! -- that it is a good and doable plan, and in fact might enhance shareholder wealth. Investment bankers will find value in any scheme, if they're paid a big enough retainer fee.
Many apologists for the Microsoft breakup plan point to the "successful" breakup of AT&T. That's a totally different situation. AT&T and its subsidiaries were freed to pursue new arenas. Microsoft will be weakened and bound by a breakup.
The Justice Department and the attorneys general, and their co-conspirators who weren't smart or nimble enough to compete with Microsoft, set out to punish Bill Gates and the company for being too successful, and wound up punishing a lot of innocent shareholders.