money.cnn.com/2003/05/29/technology/microsoft -> money.cnn.com/2003/05/29/technology/microsoft/
La Monica, CNN/Money Senior Writer NEW YORK (CNN/Money) - Microsoft will pay $750 million to AOL Time Warner to settle an antitrust lawsuit filed by AOL on behalf of its subsidiary Netscape last year, the companies said Thursday. The two companies also set a seven-year licensing agreement that allows AOL Time Warner to use Microsoft's Internet Explorer browsing technology in its flagship Internet service provider service without having to pay royalties. Microsoft and AOL said, for example, that they will work together to make their AOL and MSN instant messaging services work more smoothly together, and that they agreed to fight digital piracy and come up with ways for Internet users to legally download copyrighted content. The world's largest media company and Microsoft, the biggest software maker, have squared off on several fronts in recent years. Microsoft dipped slightly in after-hours trading Thursday following the announcement, but AOL Time Warner's stock rose 3 percent in after-hours trading, according to Instinet. For Microsoft, the $750 million payment hardly dents its cash hoard of more than $46 billion. However, Friedman Billings Ramsey software analyst David Hilal said that Microsoft will probably need to take a 5-cent-a-share charge to its fiscal fourth-quarter earnings as a result of the settlement. Analysts currently expect Microsoft to earn 24 cents a share for the quarter, not including charges. One other consequence of the settlement is that it may lead to a further phasing out of Netscape now that AOL has agreed to cooperate more closely with Microsoft. In response to a question during the conference call about Netscape's fate, Parsons said that AOL Time Warner had no plans to shut down or get rid of the unit. AOL and Microsoft were not the only two companies impacted by their announcement. Their newfound cooperation in digital media had some investors in 45 RealNetworks ( 46 RNWK: 47 Research, 48 Estimates), whose RealPlayer competes with Windows Media Player, concerned since AOL has a partnership with RealNetworks. But Parsons was quick to point out that AOL's agreements with Microsoft are not exclusive kinds of arrangements and that AOL will continue to do business with RealNetworks. Analysts quoted in this story do not own shares of AOL Time Warner or Microsoft, and their firms do not have investment banking relationships with either company.
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