Caldera, Microsoft Bury the Hatchet

Looking to eliminate one front in its high-stakes legal battle, Microsoft Corp. today settled the oldest antitrust lawsuit against it today, more than three years after it was filed.

Caldera of Orem, Utah agreed to settle its claim against Microsoft for about $155 million. Microsoft will record a one-time charge against earnings in the quarter ending March 31, 2000, which will reduce earnings per share approximately three cents.

Facing lawsuits from the United States government, 19 states, Sun Microsystems and a host of consumers, Microsoft finds itself tied up in legal battles that have cost millions and tarnished its public image. Caldera's lawsuit, which claims Microsoft illegally used its market dominance to crush a former competitor to MS-DOS, was probably the easiest entanglement to unravel.

"We are pleased to put this issue behind us," said Tom Burt, general counsel for litigation at Microsoft.

Even though the settlement amount will be a fraction of the $1.6 billion in damages Caldera had been seeking, former CEO Bryan Sparks said he was pleased with the result of the lawsuit.

Caldera was split into two companies a year and a half ago, Caldera Systems and Lineo. Sparks now serves as CEO of Lineo, but remains a stockholder in Caldera Systems, a company run by former Caldera VP Ransom Love.

Sparks took the news of the settlement as an opportunity to pitch Caldera Systems, which filed papers Monday for a Linux-fueled IPO.

"It was serendipitous; we didn't plan it this way," said Sparks. "We now look forward to vigorous competition in the marketplace with our Linux products and strategies."

Caldera was founded as a startup venture by Sparks in 1994. It was funded by former Novell chairman and famed Bill Gates rival Ray Noorda. Novell had been developing an operating system, DR-DOS, in the early 1990s as an alternative to Micosoft's MS-DOS. Noorda had always felt that Microsoft unfairly crushed DR-DOS in the marketplace by tweaking Windows 3.1 so it would not run DR-DOS properly. Microsoft had argued that problems with DR-DOS arose from it being poorly supported.

When the statute of limitations was about to run out in July 1996, Caldera bought DR-DOS, and its legal claims, from Novell for $400,000. Caldera filed suit the same day.

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