A federal jury in Connecticut last week found Microsoft not guilty of Bristol Technology's accusations that it violated US antitrust law. The jury did find Microsoft liable for breaking Connecticut state business laws, but would only give Bristol a token judgment of one dollar. The ruling followed a six week trial, during which Bristol tried to prove Microsoft violated antitrust laws by refusing to license the Windows NT source code for the same price it charged in 1994 [see NewsSource - Aug. '98]. The struggling tool maker had hoped to win up to $270 million.
While some legal analysts now predict that this verdict will have a negative impact on other antitrust cases against Microsoft, the effect will likely be small since Bristol's case was the weakest of several high-profile lawsuits - including ones by Sun, Caldera, Blue Mountain Arts and the US Justice Department. Whatever happens to Microsoft, we do know the impact on Bristol is very severe, so far forcing that small developer to lay off 20% of its 70-person work force.

After several months of speculation, Microsoft CFO Greg Maffei has confirmed a Securities and Exchange Commission investigation into Microsoft's accounting methods. The review was reportedly prompted by allegations from a former company executive who says Microsoft fired him after he discovered an unethical - and possibly illegal - accounting trick the company has uses to keep its stock price up. The executive, former internal auditor Charles Pancerzewski, claimed that he received his first bad evaluation and was then fired shortly after approaching supervisors Bob Herbold and Mike Brown about the practice in 1996. A wrongful termination lawsuit Pancerzewski filed against Microsoft in 1997 was settled late last year.
The accounting trick Pancerzewski found in use at Microsoft has long been practiced by companies like outdoor equipment manufacturers with irregular revenue streams, but the SEC has recently tried to crack down on its usage. The basics of the practice are to hold back some earnings in highly profitable quarters, then dip into that cash reserve during lean quarters, thus making company profits appear steady. Microsoft can particularly benefit from this practice, keeping their stock price up by making quarters when no new products ship appear almost as profitable as fat quarters, like a year ago when Windows 98 first went on sale.

Teledesic, a satellite communications company co-founded and partially owned by Bill Gates, has given Motorola a contract to build the 200+ low earth orbit satellites needed to create its space-based communications service. The agreement calls for Teledesic to give Mot some $250 million for services now, then eventually receive three times that much back from Motorola when it buys out Boeing's share in the venture sometime before 2001. Motorola is experienced in the field of satellite communications, recently launching a competing space-based service, Iridium. But even with Motorola's assistance Teledesic doesn't expect to get its 200-250 satellites in orbit until 2003, spending some $9 billion before anyone can make the first connection over their network.

A small California software company has filed a lawsuit against Corel, accusing the software company of infringing on a patent with features in WordPerfect. The company, Advanced Software Technologies, accuses Corel and the Reed Elsevier company of stealing software listed in a 1989 patent on software to compare legal documents in original and modified versions in a split-screen format.
So what does this story have to do with Microsoft? One of our correspondents discovered that, according to a page on Advanced Software's own web site, they have a close working relationship with Microsoft. This isn't the first time The Behemoth has used one of its partners to tighten the screws on a competitor; In early 1998 Microsoft partner Wang Global filed a similarly pointless patent suit against Netscape [see NewsSource, May 04 '98]. That case was eventually abandoned when Wang filed for bankruptcy and then merged with Getronics.

Reacting to similar deals recently announced by Micron, Prodigy, and AOL's CompuServe, Microsoft has started giving free computers to customers who pay up front for three years service from MSN Internet Access. In return for paying $650 and putting up with lousy service from MSN, customers get three years of unlimited Internet service and a free 400mhz Windows 98 PC with 64MB of RAM, a 56k Winmodem and 4GB hard disk (no monitor included). Thanks to this deal, MSN Internet Access may finally break the long-sought 100-customer mark.

Australia's Trumpet Software International recently announced the development of a new Open Source operating system that directly competes against Windows NT. That isn't significant news, except that 'PetrOS' will reportedly run 32-bit applications made specifically for Windows 9X and NT. If that isn't good enough, Trumpet also claims that the system runs in less than two megs of RAM, is smaller than 200 MB overall, and will cost between twenty and 100 US dollars. The only question now is how long it will take Microsoft to start legal action against Trumpet.

Continuing their cable buying spree, last week Microsoft paid US $400 for a 9.2% stake in Rogers Communications, the largest cable operator in Canada. Rogers provides cable television and high-speed Internet service to most of Canada's population and has control of the 2nd largest Canadian cellular phone operator. In exchange for the investment, Rogers has agreed to include Microsoft software on at least one million TV-top Internet access boxes.
Microsoft has announced plans to donate half the money it receives annually from software piracy lawsuits - around $10 million a year - to promote anti-piracy efforts. The money will be used to increase law enforcement and fund anti-piracy education movements. Law enforcement officials deny any relation between Microsoft donations and the recent upswing in piracy-related arrests.
Adding to the recently plague of executive departures inside Microsoft, Sam Jadallah has stepped down from his position as vice president of enterprise sales. Jadallah's position is expected to be permanently vacant since the recently created Enterprise Customer Unit already does most of the former executive's duties.
To become more competitive with other personal investment Web sites, Microsoft has eliminated MSN MoneyCentral's $9.95 monthly fee for premium services. MoneyCentral is currently the 4th most popular site for individual investors, trailing behind Yahoo! Finance, Quicken.com and the AOL Personal Finance center.

_{Corel scores $10 million in Microsoft dispute
Microsoft sued over `racially charged' link
Apache encroaches on Microsoft}