Microsoft News Tracker

Novell’s much discussed deal with Microsoft last November not surprisingly turns out to have had a lot of significance for Novell’s financial results last quarter:

Novell Inc. said Thursday that profit turned to loss during its fiscal first quarter and revenue fell 5%, while the company’s high profile partnership with Microsoft Corp. proved one of the only bright spots.

Waltham, Mass.-based Novell said after the market’s close that for the quarter ended Jan. 31 it had a loss of $19.9 million, or 6 cents a share, compared to net income of $1.87 million, or break-even, during the period a year ago.

Revenue for the quarter fell to $230 million, compared to $242 million a year ago. Wall Street analysts surveyed by Thomson Financial had expected the company to earn a cent a share on revenue of $234 million.
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Quarterly revenue from Novell’s Linux platform unit, which operates the Microsoft partnership, grew 46% to $15 million, the company said.

Novell Chief Executive Ron Hovsepian said the Microsoft partnership generated $348 million in cash during the quarter, adding that “without the Microsoft impact cash flow from operations would have been zero.”

The question, of course, is whether Novell will be able to successfully get off the dole.

They’re baaack! What has the European Commission’s knickers in a twist this time is Microsoft charging competitors what they consider to be unreasonable prices for the interoperability information that has long been a problem. As a result, the Commission today threatened Microsoft with additional fines and administered a tongue lashing:

The European Commission warned Microsoft on Thursday it faced further fines in its long-running antitrust battle with Brussels, this time for seeking unreasonable prices from software makers for vital data.

Strongly criticizing the U.S. software giant, the European Union executive said the latest formal charges could lead to new daily penalties on top of fines already levied.

“In the 50 years of European antitrust policy, it’s the first time we’ve been confronted with a company that has failed to comply with an antitrust decision,” the Commission’s competition spokesman Jonathan Todd said.

He said the continuing dispute, almost three years after the Commission ruled that Microsoft had abused the dominant market position of its ubiquitous Windows operating system, was solely due to the company’s behavior.

“You have to look at their attitude faced with other antitrust authorities in other jurisdictions. This is a company that apparently does not like to have to conform with antitrust decisions,” Todd told a news conference.

The bone of contention:

Microsoft has said it would be charging for interoperability information because it was based on its own innovative work and protected by patents, but the Commission said the information was either not new or available elsewhere royalty-free.

“The Commission’s current view is that there is no significant innovation in these protocols,” European Competition Commissioner Neelie Kroes said in a statement.

“I am therefore again obliged to take formal measures to ensure that Microsoft complies with its obligations,” she said, rejecting as unfounded 1,500 pages of submissions by Microsoft.

Microsoft has four weeks to reply to the charges.

Todd said any additional fines could be backdated to December 16, 2005. The company could face an extra 500,000 euros in daily penalties from December 2005 until June 30, 2006 on top of a daily fine of 1.5 million euros already levied for failing to provide complete information during that period.

Thereafter, the maximum total fine for both offences rises to a potential 3 million euros a day, he said.

That explanation of the fine isn’t real clear, but evidently we aren’t talking chump change. As I’ve said before, Microsoft needs to make this problem go away and easily could because this interoperability information is nowhere near their “crown jewels.” Dragging it out just encourages the EU bureaucrats to find something else to complain about and that something might be really be a problem for Microsoft.

Update: The full European Commission statement is online as is a Q&A. Microsoft has now issued a response via Senior Vice President and General Counsel Brad Smith:

“Microsoft has spent three years and many millions of dollars to comply with the European Commission’s decision. We submitted a pricing proposal to the Commission last August and have been asking for feedback on it since that time. We’re disappointed that this feedback is coming six months later and in its present form, but we’re committed to working hard to address the Commission’s Statement of Objections as soon as we receive it.”

More by following the link.