Updated from Dec. 23

Sun

(SUNW) - Get Report

has won an early symbolic victory in its antitrust suit against

Microsoft

(MSFT) - Get Report

, with a federal judge saying Microsoft must install Sun's Java programming language in its operating system. While Sun employees crowed, onlookers sounded decidedly skeptical about how much benefit Sun will wring from the order.

Though the stock saw an initial pop on the news --shares opened at $3.34 this morning, up 13% from last night's close of $2.96 -- the market laterlost some of its enthusiasm. By late morning, Sun haddrifted down to $3.17, a premium of 7% overyesterday.

The latest ruling relates to Sun's charge thatMicrosoft hurt Java's ability to compete with its own.Net software by offering only an outdated version inits Windows operating system. It's part of anantitrust suit filed by Sun in March againstMicrosoft.

Yesterday a Microsoft spokesperson said thecompany is "disappointed" with the order and plans toappeal the injunction.

But in a note out today, UBS Warburg analyst DonYoung wrote that the court's decision isn't reallymaterial to either Sun or Microsoft. "Java is easily downloadable off the Web for developers who are interested in the programming language," he pointed out. UBS Warburg has done banking for Microsoft.

At Lazard Freres, Luke Fichthorn was onlymarginally more positive. "This unusually strongmeasure bodes well for Sun's ongoing antitrust lawsuitagainst Microsoft," he said in a note. Butfinancially it won't make much difference, he added."The inclusion of Java on Windows makes the Sun ONEdevelopment platform much more viable, but developertools are not financially significant, in our opinion.Sun still has work to do in monetizing its softwareassets beyond Solaris." Lazard Freres offers bankingadvice to Sun.

In a conference call after the ruling yesterday,Sun's Rich Green, a vice president and the generalmanager of Java, said, "The focus here was really onsetting straight what had been done by Microsoftrepeatedly, time and time again." He complainedMicrosoft had been shipping a version of Java that isfive to six years old. "It's not compatible; it'smissing many of the features now relevant in theend-to-end market," he said.

Indeed, the judge hearing the case recentlycompared Microsoft's behavior toward Sun to TonyaHarding's kneecapping of fellow skater Nancy Kerrigan.

Green said the ruling will allow for thedistribution of a much-improved version of Java. "Thecurrent version is rich in services functionality.It's far beyond anything Microsoft's talking about.Net," he said. "What this ruling means is developerswriting to Java deploying on Sun's high-performanceplatforms will associate its success with Sun'scomplete product line."

But Sun followers expressed doubt about how muchpractical value the ruling will have. "I thinkthere's a pretty good chance it's going to be toolittle, too late for Sun," says Bill Whyman, presidentof the Precursor Group, a Washington, D.C.-basedresearch group on tech and telecom."Microsoft is now poised to enter the enterprisemarket with a whole suite of .Net servers. It wouldtake a dramatic and substantially improved strongerremedy to slow Microsoft's move into the enterprise."

Though the ruling has somelong-term strategic value, he adds, "At the end of theday, Sun is in the hardware business, and this reallyhelps, in the short term, the people who sell Javasoftware like

BEA

,

IBM

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and

Oracle

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. Sun makes very little money selling Java-enabled software; IBM and BEA make billions. And having all PCs able to read and execute Java helps their business more immediately."

From the standpoint of Sun, First Albany's WalterWinnitzki called the ruling "an important religiousbattle, but probably not something that's going toimpact the near-term momentum of the company," whichhe noted "has not been good."

The bottom line: Although Sun has scored a sweetlegal victory, it has yet to find a way to turn Javatechnology into significant profit. "It's something ofa Pyrrhic victory. Sun's real challenge is to find abusiness model

for Java thatworks," said one investment banker who has followedthe company for some time.

Today's order is only a preliminary injunction,however. It's not clear whether Microsoft will be ableto stay the latest ruling or whether it could bereversed following a full trial, which is expected totake place within two years.