NEW YORK (TheStreet) -- Microsoft (MSFT) - Get Microsoft Corporation (MSFT) Report rose Monday after the U.S. Supreme Court declined to hear Novell's appeal in a long-running antitrust case against the tech giant.
The court upheld an appeals court's ruling that rejected the software company's $1 billion lawsuit against Microsoft, which claimed the company undercut WordPerfect with its own Microsoft Word program as part of the Windows 95 launch nearly two decades ago.
Novell alleged Microsoft tricked the company into developing WordPerfect for Windows 95 and then canceled the project in order to gain market share with Word. Novell said it then had to sell WordPerfect for a $1.2 billion loss.
The appeals court, though, ruled that Novell's complaint came too late and that it did not make a large enough case that Microsoft was trying to maintain a monopoly on operating systems.
Microsoft also rose thanks to its announcement that it was aware of a flaw in Internet Explorer that could cause specific attacks against users. Microsoft revealed its knowledge of the problem, which could affect Internet Explorer versions 6 through 11, and said it is working on a fix. The security flaw could force a hacked computer to run unwanted software.
The stock was up 3.41% to $41.27 at 10:26 a.m. on Monday.
Separately, TheStreet Ratings team rates MICROSOFT CORP as a "buy" with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:
"We rate MICROSOFT CORP (MSFT) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, notable return on equity, reasonable valuation levels, solid stock price performance and good cash flow from operations. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Although MSFT's debt-to-equity ratio of 0.26 is very low, it is currently higher than that of the industry average. Along with this, the company maintains a quick ratio of 3.01, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Software industry and the overall market, MICROSOFT CORP's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
- Compared to its closing price of one year ago, MSFT's share price has jumped by 25.50%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MSFT should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- MICROSOFT CORP's earnings per share declined by 5.5% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MICROSOFT CORP increased its bottom line by earning $2.60 versus $2.00 in the prior year. This year, the market expects an improvement in earnings ($2.69 versus $2.60).
- You can view the full analysis from the report here: MSFT Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.