Spyglass, the company which which set Microsoft on the Web browser path, has announced its intention to audit Microsoft in connection with the licensing of Spyglass's proprietary version of Mosaic for use in Microsoft Internet Explorer.
Spyglass stock fell this week after the company announced it would post an earnings loss ranging from 10 to 13 cents per share for the quarter ended Dec 31, 1996. The company says its revenue, estimated at $4 million for the quarter, includes only Microsoft's minimum monthly payment for its license of Enhanced Mosaic to Microsoft.
Microsoft originally licensed the Spyglass browser as a basis for the original version of Internet Explorer, which came bundled with Windows 95 - and singularly failed to impress commentators. Since that time, a great many Microsoft resources have gone in developing browser technologies and free versions of Internet Explorer have been widely distributed.
In a release accompanying its quarterly figures, Spyglass says it "does not expect to recognize any revenue in the quarter from Microsoft in excess of the minimum quarterly payment due under the license agreement with Microsoft with respect to the licensed Spyglass software used in the Microsoft Internet Explorer product."
Spyglass has not, according to the release, been able to determine "the amount of royalties due from Microsoft in excess of the minimum payment because it has not received a royalty report with respect to the number of copies of Internet Explorer distributed by Microsoft.
"Under the terms of the agreement between Microsoft and Spyglass, Microsoft agreed to pay royalties to Spyglass based on its distribution of Internet Explorer software. The company also stated that it intends to exercise its contractual right to audit Microsoft’s records to determine whether, and to what extent, additional royalties are owed to Spyglass."
Microsoft has yet to respond.