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Microsoft Corp. will pay computer maker Gateway Inc. $150 million over four years to end a long-running legal dispute, and Gateway says it will use the money to market and develop products that run Microsoft software. As part of the settlement announced Monday, Gateway will release all antitrust claims against Microsoft based on past conduct. Microsoft denies any wrongdoing. To account for the settlement, Redmond-based Microsoft said it would take a $123 million pretax charge in the quarter ended March 31. The company also plans to take a pretax charge of $41 million for an earlier settlement with Burst.com. And it will take an additional $550 million charge to reserve funds for other antitrust matters, such as its ongoing legal wrangling with digital media rival RealNetworks Inc. The deal marks the latest in a series of agreements Microsoft has reached to put various antitrust claims behind it. “Obviously Microsoft wants to get as many legal barriers out of the way as possible,” said Alan Davis, an analyst with Seattle-based McAdams Wright Ragen. Davis said the Gateway settlement was “below the radar” compared with what Microsoft has done with bigger cases, and he noted the software company has billions of dollars in cash reserves. “It’s definitely not going to make a big dent in Microsoft’s cash balance,” he said. Over the past two years, Microsoft has spent some $3 billion to settle private antitrust lawsuits filed by Time Warner Inc., Sun Microsystems Inc., Be Inc. and Novell Inc. It also paid an undisclosed amount to a trade group that had backed antitrust complaints by the U.S. government and the European Union. Microsoft still faces some antitrust hurdles. The Novell settlement relates to antitrust claims regarding its NetWare product. Less than a week after reaching that deal, Novell filed a lawsuit regarding WordPerfect, a product Novell used to own. Microsoft also has been sued by Seattle-based RealNetworks, and is currently appealing a more than $600 million European Union antitrust ruling against it. In a statement, Irvine, Calif.-based Gateway said it would use its settlement money for creating new personal computer products that work with current and future Microsoft software, including the planned new Windows operating system. “Gateway continues to enjoy a strong relationship with Microsoft and we’re pleased to put these legacy legal issues behind us,” said Wayne Inouye, president and chief executive of Gateway. The Gateway antitrust claims arose from Microsoft’s long-running U.S. government antitrust case. At one point during that case, U.S. District Judge Thomas Penfield Jackson specifically identified Gateway as a company that had been hurt by Microsoft’s business practices. Microsoft later reached a landmark antitrust settlement in that case, which was approved by a federal court in October 2002. Under the statute of limitations, Gateway had until late 2003 to bring a case against Microsoft based on the federal case’s finding. But the companies said in a statement Monday that they had agreed to extend that period while they brokered a deal. The companies said Monday’s agreement resulted from a recent mediation but would not give any more specific timing. Gateway shares rose 8 cents, or 2 percent, to close at $4.16 in Monday trading on the New York Stock Exchange. Microsoft shares rose 3 cents to close at $24.97 on the Nasdaq Stock Market. AP Business Writer Chris Wang in New York contributed to this report. Copyright 2005 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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