January 22, 1997

Edited by Michael Mercurio


Thanks to an $8 million payment from Microsoft Corp., announced on Jan. 22, Spyglass Inc. is getting out of a contract dispute with the software kingpin. But Spyglass' stock will no longer be hooked to Microsoft's rising star.

Spyglass holds rights to the original Internet browser technology developed at the University of Illinois and has been licensing it to Microsoft to use in Internet Explorer. The licensing agreement entitled Spyglass to a royalty payment for each copy of Explorer issued, with a total annual cap of $5 million.

The two companies, however, have been at odds over how much Microsoft owes Spyglass under the agreement. Spyglass said on Jan. 2 that it would audit Microsoft to determine exactly how many copies of Explorer have been distributed. But the Jan. 22 settlement means the audit will not go forward. Under the deal, Microsoft will make a one-time payment of $7.5 million in cash and $500,000 in software and other considerations, freeing it to use the technology with no further payments.

"We're just happy that didn't have to go down the road [of auditing Microsoft] that we started to go down," says Gary Vilchick, Spyglass' chief financial officer. While Spyglass still collects royalties from other licensees, it plans to focus on selling browsers embedded in televisions, pagers, and other noncomputer devices.

By Peter Elstrom in Chicago

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