Microsoft Disappointed by Talks Collapse

SEATTLE (Reuters) - Software giant Microsoft Corp. said Saturday that it was ``disappointed'' that its talks with the U.S. government to settle an antitrust lawsuit had broken down.

The Redmond, Wash.-based Microsoft blamed the talks' collapse on the Justice Department, which filed the suit, and accused the government of seeking ``excessive and extreme'' measures against the company.

``Cleary we're disappointed that the government would not agree to a fair and reasonable settlement, because we believe it's in the best interest of consumers and the industry to resolve the case now,'' Microsoft spokesman Jim Cullinan told Reuters.

``Microsoft offered significant concessions in an effort to end this case now,'' said Cullinan. ``It's clear that the states (involved in the case) and the Department of Justice were stuck on excessive and extreme ideas that were just not going to lead to settlement.''

Microsoft has been in talks with Justice to settle the antitrust charges since last November, when a federal judge said in a preliminary ruling that the company had abused monopoly power in personal computer operating systems to harm consumers and rivals.

Last week, Microsoft made its most sweeping proposal to date, offering to split its Internet browser software from its Windows operating system, end preferential pricing for favored customers and make it easier for rivals to write software for Windows.

But Saturday, Judge Richard Posner said in a statement that he was ending his efforts to resolve the case because the positions of the two sides were ``too deep-seated to be bridged.''

``The quest has proved fruitless,'' Posner said. ``I regret to announce the end of my efforts to mediate the Microsoft antitrust case.''

Observers have said Justice and the 19 state attorneys general who are involved in the case have favored harsher punishments for Microsoft, like breaking up the company or imposing strict guidelines on its behavior.

Microsoft expected the judge in the case, Thomas Penfield Jackson, to issue his final verdict soon, Cullinan said, adding that the company was ``certainly'' prepared to appeal.

``I would think a ruling is imminent. The judge will rule when he's ready ... but it's clear to everyone where this is going,'' Cullinan said.

``At the end of the legal day, Microsoft will be seen to be pro-consumer and pro-competitive,'' he said.

Shares in Microsoft rose 2 ^7/8 to 106 ^1/4 Friday amid a general rise in technology stocks. The company's stock has fluctuated between 90 and nearly 120 in the past several months because of uncertainty over the outcome of the trial.