Something called the National Taxpayers Union has conducted a study blaming state attorneys general for “massive state pension fund losses” that are a direct result of the antitrust case against Microsoft. “State-level government employee pension funds in the states pursuing Microsoft lost more than $38 billion following a federal court ruling against the computer firm,” says a news release on the “grassroots” organization’s Web site.
This is such a crass and ridiculous argument that it is hardly worthy of notice, except that the Wall Street Journal ran an article yesterday suggesting that Microsoft itself might have influenced the National Taxpayers Union by way of a $201,000 contribution to the group. But that can’t be. In fact, Microsoft must not even agree with National Taxpapers Union’s logic, because (as we’ll see) to do so would contradict the company’s thinking about technology stock prices, including its own.
Basically, the National Taxpayers Union measured how the drop in stock prices since April 3 of this year–the day the Microsoft antitrust verdict, roughly as negative as everyone had expected, was finally announced–affected the value of 11 pension funds in eight of the 19 states that are part of the suit. The group’s analysis blames precisely 100 percent of the drop in technology stock prices between March 31 and April 14 on the verdict. The mildly clever rhetorical maneuver here is to focus not on the ill effects of a stock drop on individual investors–who presumably understand the risks involved in the choices they make–but on helpless teachers and cops and public service workers who rely on pensions whose portfolios they cannot control. According the Journal (whose report ran in the edition distributed in the Pacific Northwest and on its Web site but apparently not in all editions–the copy I received at my home in New Orleans did not have the story), the group is pushing its data by state in order to get covered by local media outlets in targeted regions.
I happen to think that the National Taxpayers Union’s logic is obviously wrong, that its argument is silly, and that a more compelling reason so many stocks have fallen from recent peaks is that they carried valuations that defied explanation. And one person who agrees with me on this score is Steve Ballmer, the CEO of Microsoft. Just last September, Ballmer commented at a business editors conference that “there’s such an overvaluation of tech stocks it’s absurd. And I’d put our company’s stock in that category.” The Nasdaq Composite Index (which includes most of the best-known tech high-fliers) fell more than 100 points after these remarks and closed at about 2,750. Microsoft fell about four points to $91.
On March 31, the Friday before the antitrust verdict was formally announced, Microsoft closed at a little over $106 a share. The Nasdaq closed at about 4,572. If Ballmer thought the September levels were “absurd,” he must have thought these numbers were surreal.
So, Ballmer and Microsoft cannot possibly agree with the National Taxpayers Union that the government’s pursuit of Microsoft is shattering nest eggs on Main Street. Personally, I have great respect for Microsoft’s willingness to fund enterprises that produce opinions that diverge from its own.