Microsoft in $150m Gateway payout

Microsoft is trying to settle many of its outstanding legal claims

Microsoft is to pay PC maker Gateway $150m (£79.4m) over four years to settle an anti-trust case.

Shares of both firms rose in New York, after they agreed to work together to develop and market Gateway products.

Microsoft will set aside more than $700m from first quarter earnings to cover costs arising from the case.

That includes $123m of payments to Gateway, $41m in payments to Burst.com, and $550m for a reserve fund to finance future anti-trust claims.

Future co-operation

The original deadline for Microsoft and Gateway to agree compensation was the end of 2003 but that was extended by both firms as talks dragged on.

Monday's settlement eventually rose out of mediation, however, Microsoft denied any liability to Gateway.

The claims stemmed from the mid-1990s and the United States v. Microsoft anti-trust case in which Judge Thomas Penfield Jackson said Microsoft's practices had hurt Gateway.

Gateway will now drop all anti-trust claims against Microsoft, which is also negotiating with the European Commission over a different unfair competition case.

Both firms said they were glad to put their legal differences behind them and will co-operate on future products.