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Microsoft to Pay Gateway $150 Million to Settle Antitrust Claims

Microsoft and Gateway settled differences resulting from the U.S. v. Microsoft antitrust case Monday with the announcement of a $150 payment from Microsoft that Gateway will use in part to develop and sell systems running Windows and Office.

"We're pleased to put these legacy legal issues behind us," Wayne Inouye, Gateway president and CEO, said in a statement. The 20-year-old, Irvine, Calif.-based PC manufacturing company was named in U.S. District Judge Thomas Penfield Jackson's Findings of Fact in the antitrust case as having been hurt by Microsoft's business practices. Gateway will drop all antitrust claims against Microsoft based on previous conduct. In paying the money, Microsoft denies any liability to Gateway.

For Microsoft, the Gateway settlement is as much a business investment as it is settling an old claim. Microsoft's revenues depend largely on sales of new PCs. Gateway expects to use the money for advertising, sales training and sales consulting. It also plans to use the money on R&D and testing of Gateway products that can run current Microsoft products, Windows Longhorn and Office 12.

The Microsoft payment of $150 million will occur over four years. Also on Monday, Microsoft reported to investors that it would take a pre-tax charge in the financial quarter that ended March 31 of $123 million for the Gateway payment, $41 million used to settle a lawsuit with Burst.com and $550 million to reserve for other antitrust-related claims.

About the Author

Scott Bekker is editor in chief of Redmond Channel Partner magazine.

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