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2000 Caldera-Microsoft Settlement Surfaces in Novell v. Microsoft Antitrust Lawsuit

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The Novell/Canopy/Caldera/DR DOS story continues, and Novell and Microsoft are in the middle of it all, battling in discovery in the Novell v. Microsoft antitrust litigation -- that is the litigation over WordPerfect currently before the US District Court in Maryland in pretrial discovery.

Microsoft politely asked for [PDF] all documents "relating to Novell's sale of PC operating systems claims to Caldera and Novell's involvement with Caldera's case against Microsoft", as well as "all documents produced by parties and third parties" in the Novell v. Canopy case. Why? Because it is its theory, which it wants to do discovery to demonstrate, that Novell sold all its antitrust claims to Caldera, and that would kill off the two remaining claims Novell has brought against Microsoft in the antitrust case. Microsoft, not satisfied with what Novell produced or its reasons for refusing to produce some documents, brought a Motion to Compel Discovery [PDF] [Memorandum in Support (PDF)], and it has just been granted [PDF]. In Novell's opposition [PDF] to the motion, it attached some exhibits, one of which is the settlement agreement [PDF] in the Caldera v. Microsoft litigation, as Exhibit K.

Finally, we get to read it.

More Here

Very important smoking gun

For context, you might want to see this.

The short story is that Microsoft has repeated its pattern of destorying evidence so as to avoid future action against its corruptions. Those wanting to see similar examples would appreciate:


We know that the SEC became interested after Microsoft settled with a whistleblower former employee, who funnily enough then shut up, and because Microsoft admitted that the SEC has started a “non-public investigation into the company’s accounting reserve practices”. This investigation was spurred following disclosures related to a wrongful dismissal claim brought by Microsoft’s former (internal) general auditor, Charles Pancerzewski, who had been offered a “resign or be fired” choice in 1996 after he claimed accounting practice irregularities. Pancerzewski complained that Microsoft used its reserves to pad its earnings in lean quarters, with the result that Microsoft misreported its earnings.

Microsoft’s “unearned revenue from prior periods” in its cash flow statement shows that Microsoft recognised $5.6 billion in fiscal 2000, up from $4.526 billion in fiscal 1999 and $1.798 billion in fiscal 1998. Pancerzewski filed suit under the Whistleblowers Protection Act, resulting in Microsoft’s records being subpoenaed. The judge decided there was enough evidence to go to trial on the whistleblower charges, but Microsoft quietly settled out of court, with Pancerzewski apparently accepting $4 million in compensation, a gagging agreement, and the sealing of the court record.

It is interesting to recall that pundit Robert Cringely noted a conversation he had with former Microsoft CFO Frank Gaudette. When asked what signs there would be as to when Microsoft stock should be sold, Gaudette said: “Watch for any changes in our accounting. If I need, I can start depreciating the software and maintain earnings growth for years on flat revenue.” Although Microsoft hasn’t yet reached the point of doing this, it is highly significant that a major change in the accounting system was introduced recently, especially as lacklustre results are expected for the current Q1.


Microsoft securities fraud might have it toppled like Enron one day. But the relationships with the Bush administration has stood in the way of proper scrutiny.

Remember: Microsoft lost $18 billion in 1998. It just plays financial games with assets it may not really have.

More details have been made available on this subject thanks to Bill Parish:

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