Nobody trades preferred stock for money after winning a suit, you just take the money. And there was no rumor spending after the fact it was KNOWN at the time that Apple was losing money hand over fist, their stock was in the toilet, their market share was down, and then in came MS with an infusion of cash but most importantly an agreement to keep making product for Mac. The face saving here is from you saying this was the result of a suit. Why would MS need to save face, as you point out they sold the stock at substantial profit, they rode in for the rescue and made a boat load of money on the deal, nothing there that requires face saving.
Apple was in trouble during those years, they probably didn’t really need the cash that bad, while they were losing money they’d developed a serious war chest, but MS was threatening to pull out of making a version of Office for the Mac, there wasn’t very much productivity software for Macs at the time and if MS had pulled out there would have basically been none. That could have killed them, it’s hard to sell computers with no productivity software available. Thanks to the preferred stock MS kept making Office for Mac, and kept it a viable platform for doing stuff other than special effects.
Nobody really won the suit, it was part of the terms of settlement.
It does happen in other industries, you know.
Nobody trades preferred stock for money after winning a suit, you just take the money.
You do if it was part of a negotiated settlement... and this was.
And there was no rumor spending after the fact it was KNOWN at the time that Apple was losing money hand over fist, their stock was in the toilet, their market share was down, and then in came MS with an infusion of cash but most importantly an agreement to keep making product for Mac. The face saving here is from you saying this was the result of a suit. Why would MS need to save face, as you point out they sold the stock at substantial profit, they rode in for the rescue and made a boat load of money on the deal, nothing there that requires face saving.
BS, Discostu. I was there and the purchase of the preferred shares was reported in the news. It was only later that the "revised" story of "rescuing a beleaguered Apple" was pushed. Microsoft did not magnanimously give Apple an infusion of cash... they bought the preferred stock as part of the negotiated settlement of the lawsuit. This is not "my saving face" but fact. If you can't believe it, here is the contract between Apple and Microsoft:
Once the ink was dry on that contract, Apple dropped its lawsuit against Microsoft, a lawsuit that was making it very uncomfortable for MS because of the close scrutiny of the Feds. Microsoft was using the release of the already developed and ready to go MS Office '97 as leverage to get Apple to capitulate on the lawsuit... but it also smacked of monopolistic practices that the Fed was already ready to bring Microsoft up on charges for. Ironically, it was not the heavy handed use of MS Office for Mac that would later became the Governments focus of Microsoft's monopolistic practices but rather the forced bundling of Internet Explorer in lieu of Netscape... which was part of the Apple/Microsoft settlement.
Apple, however, had leverage of its own to bring to bear. Apple had discovered that Microsoft had lifted code wholesale from Quicktime and incorporated it into Windows Media Player and had initiated another patent infringement lawsuit against Microsoft where the damages could be in the billions of dollars. It was this lawsuit that resulted in the settlement agreements.
David Boies, attorney for the [Department of Justice], noted that John Warden, for Microsoft, had omitted to quote part of a handwritten note by Fred Anderson, Apple's CFO, in which Anderson wrote that "the [QuickTime] patent dispute was resolved with cross-licence and significant payment to Apple." The payment was $150 million. This is very interesting news indeed, because it closes another chapter that has a hitherto secret ending in the saga of Microsoft's murky business practices. It's an interesting and little-known story. The confirmation of the payment appears to be the first hard news that Microsoft had been forced to back down in Apple's case against Microsoft . . . - i<>Graham Lea, The Register, 10/12/1998
Microsoft capitulated and signed the settlement agreements. It was in Apple's interests to accept because Apple not only got MS to continue to develop and distribute MS Office for Mac but also got the $150,000,000 AND received undisclosed royalties from the Quicktime software patents from Microsoft without going through years of litigation. Some have reported that the payments for the royalties totaled upwards of several hundred million to a billion dollars over the five year contract... and in addition, Apple gained perpetual licenses from MS for some of its software patents for no cost at all.
If you read the fine print in the contract, Apple also retained the ability to prevent the shares from being converted to common shares or even being sold over the a period of several years to guarantee Microsoft's compliance with the other agreements.
industry news reporters and commentators were aware of the background of the payment:
" Five years ago, Apple Computer announced an almost unthinkable pact with Microsoft: The software giant would continue to develop Office software for the Mac, and Apple would bundle Internet Explorer in all new machines.
In addition to the Office-Explorer trade-off, the pact called for Microsoft to purchase $150 million in Apple stock and for Apple to drop a long-standing patent lawsuit. - C-Net news, February 22, 2002
Even the US government knew about the settlement:
The judge in the anti-trust case against Microsoft commented on the linkage of the preferred stock purchase, the licensing of software patents, the agreement to continue production and development of MS Office for Mac, and Apple's cross agreement to bundle Internet Explorer with the dropping of Apple's lawsuit against Microsoft. See Page 29 of the "Findings of fact" document.
Other commentary from the computer punditry:
". . . According to common legend, Microsoft was forced to pump millions in Apple to prop up the struggling rival as an apparent competitor to fool the Feds, who were hot on its tail leading up to the monopoly trial.In addition to serving as an antitrust ruse, analysts, columnists, and sensationalists of all stripes have chimed in to add extra flourish to the legend of Apple’s rescue.
Legend Becomes Myth
As noted in Paul Thurrott's Merciless Attack on Artie MacStrawman, it is fashionable among Microsoft apologists to insist that the company bailed Apple out in an altruistic act of compassion, and that any success now enjoyed by Apple should rightfully be delivered to Microsoft in tribute.Mark Stephens, writing as Robert X Cringely, speculated that Apple made the deal to gain access to Windows code, and is secretly using the now expired cross licensing agreement to deliver the Red Box, a system for flawlessly running yesterday's Windows applications within Mac OS X, just as seamlessly as OS/2 could run Win16 and DOS programs.
Others have suggested Apple was just out of money and desperately needed Microsoft's help, ignoring the fact that Apple had just reported holding $1.2 billion in cash. Another $0.15 billion wasn't going to make any significant difference in the survival of the company.
We also already know that Microsoft isn't really compassionate, and that the Red Box isn't going to happen; it was a questionable idea ten years ago, and the concept has only grown more absurd with the passing of time . . .
. . . The 1997 agreement killed the ongoing lawsuits and conflict related to Microsoft's copyright violations, patent infringement, and stolen code. - Roughly Drafted Magazine
Which company gained from these agreements? Certainly not Microsoft. They lost. They paid. The face saving comes after the fact and appears to have been spread by "unofficial" Microsoft mouthpieces, such as Thurrott and Cringely, who toed the MS company talking point lines on many other issues.
Apple was in trouble during those years, they probably didn’t really need the cash that bad, while they were losing money they’d developed a serious war chest, but MS was threatening to pull out of making a version of Office for the Mac, there wasn’t very much productivity software for Macs at the time and if MS had pulled out there would have basically been none. That could have killed them, it’s hard to sell computers with no productivity software available. Thanks to the preferred stock MS kept making Office for Mac, and kept it a viable platform for doing stuff other than special effects.
Yes, Apple had posted a staggering $816 million loss in 1996... but by the time of the lawsuit settlement agreements and Microsoft's preferred stock purchase, Apple had returned to profitability (small, about $25 million the previous quarter, but genuine) and profits were growing. In addition, Apple had $1.2 billion in the bank in cash and another $300 million in liquid investments. Jobs had cut the product line from over 30 models down to about six, cancelled the clone agreements that were killing Apple, and put the company back onto the proper road.
Also your claim that "there wasn't much productivity software for Macs" at the time is not really true. Remember that the majority of newspapers and magazines were being produced on Macs. Certainly QuarXpress, Pagemaker, Photoshop, and a host of other "productive" software was available for the Mac. If your are just referring to word processing and office applications, Corel Wordperfect Office Suite was available for Mac as well as several other smaller competitors... although Microsoft was doing everything it could to kill them. Apple was also shipping a free version of ClarisWorks5 with all of its non-professional grade Mac Performa computers. However, Apple DID want Microsoft to continue producing Office.
Care to retract your comment that "The face saving here is from you saying this was a result of a suit" now?