Microsoft forks out US$536m to Novell to end case

9 Nov 2004

Following an agreement by Microsoft to pay Novell US$536m over alleged unfair practices, the networking software company said it will withdraw from a both a US and a European Commission action on the matter. The action concerned Novell’s Netware system that was once marketed as an alternative to Windows.

However, according to Microsoft, while the parties were able to resolve all antitrust claims related to Novell’s current businesses, including NetWare, they have not been able to reach agreement concerning Novell’s antitrust claims related to its ownership of WordPerfect between June 1994 and March 1996. WordPerfect was marketed during the Nineties as an alternative to Microsoft Office. Novell retains the right to pursue those claims.

“Over the past two years, we have made a sustained effort to build more constructive relationships with our industry partners and competitors,” said Brad Smith, senior vice-president and general counsel for Microsoft.

“Todays Netware settlement is a product of that effort and reflects an open dialogue the companies established to address and ultimately resolve this matter. We could not resolve claims related to WordPerfect in any manner we thought appropriate, and we are prepared to turn to the courts to resolve it.”

Due to the nature and timing of the settlement, the first-quarter financial results that were previously released on October 21 will be updated to include the impact of the settlement. Net income and earnings per share for the quarter were US$2.53bn and US$0.23 respectively

In light of recent progress in addressing antitrust litigation and claims that have been made against Microsoft, including the recent developments with Novell, the company said it believes that it can now estimate the additional antitrust exposure that it is reasonably possible it will incur.

The company estimates that it is reasonably possible it will incur additional exposure of up to US$950m for remaining antitrust claims, including US$200m above the amount previously described in its most recent 10-K filing with the US Securities and Exchange Commission related to resolving remaining class action overcharge cases.

By John Kennedy