Microsoft pleased with ruling, eyes settlement

SEATTLE: Microsoft Corp. said on Thursday that it was pleased with a US

appeals court's reversal of a proposed breakup of the software giant, saying the

ruling would give it good standing in any retrial.

But the software giant, which was sued by the US Justice Department and 19

states for allegedly using its Windows operating system monopoly illegally, also

indicated it was ready to head to the bargaining table for a settlement.

"Today's ruling drastically narrows the case and removes the breakup

cloud from the company. We will continue to work to resolve the remaining issues

without the need for continued litigation, which benefits no one "

Microsoft spokesman Jim Cullinan said.

Both sides claimed victory, but the stock market was clearly on Microsoft's

side. Its stock ended Thursday higher while shares of key rivals fell. After

being halted most of the day, Microsoft shares ended up $1.60, or 2.3 percent,

at $72.74 in a burst of trading that briefly overwhelmed Nasdaq's systems.

The US Court of Appeals for the District of Columbia ordered that a new lower

court judge look at whether Microsoft illegally tied its Internet browser to

Windows to maintain its monopoly, a question that could have implications for

Windows XP, the upcoming version of the operating system.

The seven-judge appeals panel agreed that Microsoft holds a monopoly in

personal computer operating systems and that some of its competitive practices

amounted to illegal use of that monopoly.

The court also ordered that a new lower court judge look at whether Microsoft

illegally tied its Internet browser to Windows to maintain that monopoly, a

question that could have implications for future versions of the software that

bundle in other features.

But it overturned a ruling by the lower court judge, Thomas Penfield Jackson,

that Microsoft had tried to monopolize the Web browser market. Microsoft said

the bulk of the appeals ruling was positive and supported its argument that it

has the right to keep adding features to Windows.

"The central issue in the case has always been the ability of every

company to innovate and improve its products, and we are very pleased that

today's ruling reverses the district court on this issue. That provides a very

positive framework if these issues have to be retried," Cullinan said.

Shares in Microsoft rose $2.02 or 2.8 per cent, to $73.16 in very active

Nasdaq trading after being halted throughout the afternoon.

(C) Reuters Limited 2001.