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Microsoft settles antitrust claims with IBM

Microsoft settles antitrust claims with IBM

Microsoft Corp. has settled antitrust claims made by International Business Machines Corp. agreeing to pay $775 million (438 million pounds) to IBM, the companies said on Friday.

One major antitrust action remains against Microsoft Corp. by multimedia software maker RealNetworks Inc. as well as a handful of smaller disputes.

The cases came in the wake of the landmark 2002 settlement by the U.S. government against Microsoft that led to subsequent agreements with several U.S. states, the European Union and other companies.

"This is a significant step toward our efforts to resolve these issues with other companies," said Brad Smith, general counsel and senior vice president at Microsoft.

Under the settlement, which resolves discriminatory pricing and overcharge claims made by IBM against Microsoft, the software maker will extend $75 million in credit toward deployment of Microsoft software at IBM.

Smith said the agreement was reached late Thursday, the last day of the fiscal quarter. He declined to comment on how the settlement affects Microsoft's quarterly financial results, or whether monies previously set aside to pay legal claims would be tapped in this case.

"We will provide information during our earnings call on July 21 about how this settlement impacts the company financially," he said.

Last year, Microsoft agreed to pay $2 billion to Sun Microsystems Inc. In April, it paid Gateway Inc. $150 million. It has yet to resolve an outstanding claim by Novell Inc. tied to its WordPerfect business.

OTHER OUSTANDING CLAIMS

In the largest remaining claim, RealNetworks said that Microsoft unfairly used its Windows monopoly to take market share away from its Real media player, and sued its larger rival for more than $1 billion.

Since taking over the chief executive position from Bill Gates in 2000, Steve Ballmer has made it a top priority to resolve the remaining antitrust claims as well as other lawsuits facing the software giant.

In Europe, Microsoft has already paid a fine of nearly 500 million euros to the European Commission for antitrust violations and agreed to sell a version of its Windows operating system without Media Player.

Also remaining is a claim by IBM that Microsoft's market dominance harmed its server hardware and server software business. IBM has agreed that it will not assert claims for monetary damages for two years nor seek to recover damages on server-related claims incurred prior to June 30, 2002.

The $775 million settlement will result in an undetermined one-time gain that IBM plans to take in the second quarter, ended Thursday, the same day the settlement was signed.

"This is a nonrecurring second-quarter event," IBM spokesman Scott Brooks said. He declined to comment on other factors influencing the company's second-quarter results.

The Microsoft settlement gain will join a variety of other one-time gains and charges in IBM's second quarter. IBM has said it plans to take a gain of roughly $1 billion on the sale of its PC business to Lenovo Group Ltd. of China.

It will record restructuring charges to cover the costs of cutting up to 13,000 jobs, or 4 percent of its work force.

The computer maker's quarterly results, which are scheduled to be reported on July 18, will also reflect the impact of how the company expenses stock options granted to employees.

IBM shares rose 33 cents to $74.53 on the New York Stock Exchange, while Microsoft slipped 4 cents to $24.80 on Nasdaq.


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