Microsoft Estimates Remaining Antitrust Exposure at $950 Million

With more than a dozen antitrust cases settled, or at least already accounted for in the case of the European Commission fine, Microsoft's lawyers are telling investors they're seeing the light at the end of the tunnel.

"The company believes that it can now estimate the additional antitrust exposure that it is reasonably possible it will incur," the company said in a statement. "The company estimates that it is reasonably possible it will incur additional exposure of up to $950 million for remaining antitrust claims."

That figure includes $200 million above an amount the company previously described in its most recent 10-K filing with the U.S. Securities and Exchange Commission related to resolving remaining class action overcharge cases.

Microsoft made the estimate "in light of recent progress in addressing antitrust litigation and claims that have been made against Microsoft, including the recent developments with Novell."

This week, Microsoft settled antitrust claims with Novell for $536 million and reached agreement with the longtime critic, the Computer & Communications Industry Association. That follows the blockbuster settlement with Sun Microsystems in April that cost Microsoft nearly $2 billion in up-front payments.

Also this year, Microsoft settled class-action lawsuits with New Mexico, Vermont, Massachusetts, Arizona and Minnesota. In 2003, the company settled class-action lawsuits with Tennessee, South Dakota, North Dakota, Kansas, Washington, D.C. and Montana.

That Microsoft lawyers feel they have a handle on total antitrust exposure is not surprising, given the company's decision to start returning its $60 billion in cash to investors. Microsoft in July announced a special one-time dividend of $3 per share (approved by shareholders this week), a four-year stock buyback plan and a move to quarterly dividends. All together, the steps will return an estimated $75 billion to investors. At the July announcement, Microsoft attorneys said progress in settling cases allowed it to start drawing down its cash reserves.

About the Author

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