Microsoft Cash Could Bail Out Ailing Inprise

Microsoft will license Inprise's technology patents for $100 million [M] and buy a 10 percent stake in the Scotts Valley, California-based vendor valued at $25 million [M]. The move will bring to an end patent issues between the pair, the report added.

Old sparring partners Microsoft Corp. and Inprise Corp. are reportedly striking an alliance which will see Microsoft pouring a much needed US$125 million [M] into the troubled development-tools vendor.

Under the terms of the deal, which a Wall Street Journal report said is likely to be announced later today, Microsoft will license Inprise's technology patents for $100 million [M] and buy a 10 percent stake in the Scotts Valley, California-based vendor valued at $25 million [M]. The move will bring to an end patent issues between the pair, the report added.

Enmity between the duo dates back a number of years to when Inprise, then known as Borland International Inc., had a wider product portfolio that often pitched the company into competition with Microsoft.

For instance, Borland had its own spreadsheet software, Quattro Pro, which competed head-on with Microsoft's Excel and Lotus Development Corp.'s 1-2-3 products. At one time, Borland allied itself with word processor vendor WordPerfect Corp. in an attempt to take on Microsoft's Office applications suite. The move was unsuccessful and Borland later sold off Quattro Pro to Novell Inc., which also acquired WordPerfect. Novell later sold both products to Corel Corp.

Microsoft and Borland battled on another front in mid-1997 when Borland alleged that Microsoft had illegally poached its staff to gain a competitive advantage in the development tools arena. The lawsuit, seen by many observers as a publicity drive by Borland, was settled out of court in September of 1997. Inprise has never sued Microsoft for patent infringement, today's Wall Street Journal report said.

The reported Microsoft cash injection comes at a critical time for Inprise.

During the company's annual stockholder meeting on Friday, Dale Fuller, Inprise interim president and chief executive officer, announced that the company is putting on hold its plans to split operations into two businesses (Inprise and borland.com), a move first announced in January. The freeze on the plans will give Inprise time to review its options, he added.

Inprise has long been considered a possible acquisition target for the likes of Oracle Corp. and Sun Microsystems Inc. due to its loyal user base and its technology. Oracle, for instance, signed a multi-million U.S. dollar licensing deal with Inprise earlier this year to expand its use of Inprise's VisiBroker ORB (object request broker) technology.

Fuller only joined Inprise in April, following the abrupt resignation of the previous CEO Del Yocam, who had been hailed as the man to turn around Inprise's financial fortunes. Yocam joined Borland in late 1996 to try and staunch the company's flow of red ink. His strategy to stop financial hemorrhaging was to shift the company's focus onto enterprise-level customers, away from Inprise's core user base of developers and desktop end-users. Under his leadership, Borland was re-christened Inprise in April of last year.

Yocam was the architect of the plan to split Inprise into two pieces -- Inprise, based in San Mateo, California, focusing on enterprise software and borland.com, based in Scotts Valley, California, acting as a Web tools and services vendor for both itself and third-party companies. At the same time, the company announced it would cut its worldwide staff by 20 percent.

For its most recent quarter, the three months ended March 31, 1999, Inprise reported a first-quarter loss, including restructuring charges of $15.1 million [M], of $25.6 million [M], on revenues of $43.4 million [M].

The likely Microsoft bailout of Inprise is strikingly similar to the software giant's propping up of ailing hardware and software vendor Apple Computer Inc. back in 1997, when the software giant poured $150 million [M] into Apple. The Microsoft, Apple deal also involved the settling of cross-license patents.

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