Microsoft's fight against a judge's order to break up the company received a fillip yesterday after the US supreme court declined the government's request to hear the appeal - instead sending it to a lower court.
The decision was seen as a victory for Microsoft, because the US court of appeals has ruled in the software maker's favour in past competition clashes with the government.
"I think the ruling is a positive," said Henry Asher, president of Northstar Group, a money management firm that includes Microsoft in its portfolio.
"Ultimately the more important question for the business model is the success of new-generation software, but the ruling is the first piece of really good news the company has had on the legal front for quite a while."
In early Nasdaq trading the shares reached $64, up almost 6%.
In June, Judge Thomas Penfield Jackson gave the company four months to devise a detailed blueprint for splitting into two separate corporations after being found guilty of abusing its stranglehold over the personal computer industry.
To prevent a protracted legal dispute which would leave a dark cloud hanging over the industry, the justice department took advantage of a little-used rule to seek immediate supreme court review of the case when Microsoft announced an appeal.
But yesterday the supreme court agreed with Microsoft that its appeal should first be heard by a lower court. Of the nine high court members, only Justice Stephen Breyer dissented from that view. He said the case "significantly affects an important sector of the economy".
Chief justice William Rehnquist declined to exclude himself from the Microsoft case, even though the company has hired a law firm in Boston for which his son works.
Analyst Laura Ledermen, of William Blair & Co, said the decision by the US supreme court was certainly a positive for the share price because it gave the company more time to prepare its defence.
She also noted that the decision by the lower court, which ruled in Microsoft's favour in a related hearing in 1998, was more likely to be upheld by the supreme court.
However, Larry Wachtel of Prudential Securities warned that, with the appeals process now likely to take one or two years and sales of Windows 2000 slowing, the future for Microsoft was still unclear.
"It's a very complex matter, and the supreme court wants it solidified in the appeals process. All that's happened is that instead of a decision immediately, we'll get it probably over a one- to two-year basis. There is still uncertainty where it goes," he said.
Microsoft's chief executive, Steve Ballmer, played down the importance of yesterday's ruling, calling it "just another procedural step in the process", although he said that the company was glad to have the opportunity to present its case to the lower court.
Justice department spokeswoman Gina Talamona said: "We look look forward to presenting our case to the court of appeals as expeditiously as possible."
Under the terms of Judge Jackson's ruling, one of the two Microsoft companies would own and market the Windows operating system while the other would handle the other software, such as its Word programme and internet browsers.
