Control.com - Nerds in Control

Sun, Microsoft Settle; Take Aim at Linux By Duncan Martell

Fri Apr 2, 2:39 PM ET

SAN FRANCISCO (Reuters) - Sun Microsystems Inc. (Nasdaq:SUNW - news) and Microsoft Corp. (Nasdaq:MSFT - news) on Friday settled their bitter antitrust battles, uniting the two rivals to take on the increasingly popular Linux (news - web sites) operating system.

The settlement includes Microsoft payments of $2 billion to Sun, which has had 11 straight quarters of declining revenues. Sun also said on Friday that it would cut about 3,300 jobs or 10 percent of its workforce.

For Microsoft, the resolution, along with the recent European Commission (news - web sites) decision to fine the company around $600 million in penalties, allows it free up its growing $53 billion cash pile. Microsoft had said it would hold onto the cash while the threat of major litigation remained.

Both companies are facing stiff competition from upstart Linux, the operating system that can be copied and modified freely, in the market for server software used to run networked computers that power large businesses.

"Sun and Microsoft have a common enemy: Linux," said Rob Enderle, principal analyst Enderle Group in San Jose, California. "They are seeing each other as less of a threat and, together, facing a common threat."

Shares of Sun were up about 18 percent, while shares of Microsoft were up 3 percent in afternoon Nasdaq trade.

The settlement, which resolves the bitter rivalry between Sun Chief Executive Scott McNealy and Microsoft Chairman Bill Gates, will give customers who were thinking of moving to Linux a reason to stay with Sun and Microsoft, analysts said.

Just as the leaves are turning brown
Good old Goose fair come to town
Nottingham town
'Queen of the Midlands'
I'd just hate to see the King......... "