So Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM) finally settled their squabble. If you really think about the history of computing, the entire episode is a theater of the absurd. Big Blue suing Mr. Softy on antitrust charges?
Cast your mind back to the early '80s and before, and you'll see what I mean. IBM virtually owned (or pwn3d, in the computer-influenced parlance of our times) the entire personal-computing biz. Big Blue lost out to Bill Gates' little upstart operating systems because, well, it was simply out-hustled. How on earth can an industry elephant, packing what many people regarded as superior operating-system technology, lose out to the mouse and then cry foul?
It's not that simple, of course. Let's not even worry about the whole complicated saga; it's already had its day in court. In the U.S. v. Microsoft case, U.S. District Judge Thomas Penfield Jackson found that Microsoft's practices had harmed IBM. While the case made the lawyers a lot richer (as always), it cost Microsoft shareholders another few hundred million bucks. That was $775 million cash, to be precise, plus a $75 million coupon for IBM to purchase Microsoft products. How's that for a final irony? C'estla vie.
The agreement lays to rest all antitrust claims regarding IBM's OS/2 and SmartSuite software, discriminatory pricing, overcharges, and the time Bill Gates said that "IBM stands for Ineffective Buncha Monkeys" in the lunchroom, hurting IBM's feelings and causing toadies Dell (NASDAQ:DELL), Intel (NASDAQ:INTC), and Hewlett-Packard (NYSE:HPQ) to snarf milk out their noses. (Apple (NASDAQ:AAPL), of course, was sitting by itself across the lunchroom, writing dark poetry and scoffing at all the "conformists.")
OK, I'm not sure that last bit was part of the deal. However, the settlement does exempt claims on damages relating to IBM's server business. Instead, there's a two-year moratorium on monetary bickering over that turf, and IBM further agreed not to ask for moolah for any such claims predating June 30, 2002.
It's unclear how much of this $850 million payout is already accounted for in Microsoft's previous humongous legal set-asides. The House of Bill promises to deliver the details with its Q4 results at the end of July. But it's clear that, despite the price tag, this is yet another good thing for Microsoft. Legal headaches have put a crimp on the firm's earnings and cash flow for too many years. With Longhorn and the new Xbox 360 on the horizon, it's time for Redmond to get away from the bickering and focus on the business.
For related Foolishness:
- Is Mr. Softy dancing with the devil?
- IBM and Microsoft, two good wish-list stocks.
- More settlements in Softy-town.
Seth Jayson still has his book of lonely, nonconformist lunchroom poetry. At the time of publication, he had positions in no company mentioned. View his stock holdings and Fool profile here. Fool rules are here.
