Microsoft settles with SunMicro for $2bn
By Scott Morrison in San Francisco, Paul Taylor in New York and Daniel Dombey in Brussels
Published: April 3 2004 5:00 | Last Updated: April 3 2004 5:00

Sun Microsystems and Microsoft settled a long-running legal battle over patents and unfair competition yesterday, ending more than 10 years of animosity between the two information technology giants. Microsoft will pay Sun nearly $2bn (�1.1bn), with the two rivals agreeing to make their competing technologies work together "in the interests of customers".

Sun had been due to go to court accusing Microsoft of trying to sabotage its Java software. It had also helped launch a European Union case against the company. The EU imposed a record $610m fine on Microsoft last week, ruling that the company must share more information about its software code with Sun and other computer server groups.

Yesterday's agreement ended all legal action between Sun and Microsoft. Sun said the deal fulfilled the goals it was pursuing in EU actions pending against Microsoft. However, a spokeswoman for Mario Monti, EU competition commissioner, said: "This case was never about helping particular competitors; it was about consumers and promoting competition."

The companies' agreement, coupled with restructuring and job cuts at Sun, was welcomed on Wall Street. Sun's shares closed up 21 per cent at $5.06. Meanwhile Sun announced that it would slash 3,300 jobs, about 10 per cent of its workforce. The company has reported 11 consecutive quarters of falling revenues, mainly reflecting the declining market for its proprietary systems.