UPDATE: Microsoft Settles Caldera Antitrust Suit

Microsoft Corp. and Caldera Inc. have reached an agreement to settle their longstanding antitrust lawsuit, the companies said in a statement issued this afternoon.

As a result of the settlement, Microsoft will take a one-time charge against its earnings for the quarter ending March 31, 2000, that will reduce earnings by about 3 cents per share, the company said.

The terms of the settlement, which the companies said are "mutually agreeable," are being kept confidential. Caldera had been seeking US$1.6 billion in damages in the case, which was scheduled to go to a jury trial on Feb. 1. [See "Next Up vs. Microsoft: $1.6B Caldera Suit," Dec. 10, 1999.]"We are pleased with the result of this lawsuit. We now look forward to vigorous competition in the marketplace with our Linux products and strategies both from Caldera Systems Inc. and Lineo Inc.," Bryan Sparks, Caldera Inc.'s chief executive officer, said in a statement.

Caldera filed its antitrust lawsuit against Microsoft in 1996, claiming that Microsoft illegally used its dominance in the desktop software market to squelch competition from DR-DOS, an operating system Caldera purchased from Novell Inc. in the same year. Microsoft has denied the allegations.

Microsoft doesn't expect today's settlement to have an impact on the U.S. government's ongoing antitrust case against it, or on a handful of private class-action lawsuits that have been filed in several U.S. states, Microsoft spokesman Jim Cullinan said.

"We'd always stated that we would prefer to reach a fair agreement out of court rather than go through a costly litigation process," Cullinan said. "We're pleased to put this behind us."

In a statement posted on its Web site, Caldera officials played down the company's decision to settle.

"We stood up against them. We believe that our actions will have a deterring effect against future misconduct. We have demonstrated that it is possible to successfully file a lawsuit against Microsoft and have a positive result," the statement read.

Caldera also said it helped to expose "many new facts regarding Microsoft's business conduct" during the lengthy pretrial process.

Among other actions, Caldera's suit alleges that Microsoft unfairly required PC makers to use Microsoft's MS-DOS software as a condition for receiving a license to use Windows. The suit also accused Microsoft of "tying" Windows 95 to MS-DOS in a way that made it appear that Windows 95 would not run properly with competing versions of DOS.

The U.S. government's antitrust case against Microsoft, which is still pending, includes similar allegations that Microsoft forced PC makers into restrictive licensing agreements and "tied" software products together in a way that benefited only itself. Microsoft denies those charges also.

Both companies have posted extensive background about the case on their Web sites, including court filings and a copy of Caldera's original and amended complaints. Caldera's site is at http://www.drdos.com/. Microsoft's filings and statements are at http://www.microsoft.com/presspass/caldera/.

Microsoft, in Redmond, Washington, can be reached at +1-425-882-8080 or at http://www.microsoft.com/. Caldera, in Provo, Utah, can be reached at +1-801-377-7687 or at http://www.drdos.com/.

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