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Tech Industry

Microsoft buys into General Magic

The software giant invests in General Magic and is licensing some of the troubled company's technologies.

Microsoft (MSFT) said today it is investing in General Magic (GMGC) and licensing some of its technologies, a move that could breathe new life into the software company.

Terms of the agreement include a $6 million payment to General Magic, the companies said. But details of the unexpected arrangement--such as what exactly Microsoft will get in its minority investment--remain unclear.

Nevertheless, the news boosted General Magic's stock price to a close of 6-15/32 today, nearly tripling yesterday's close of 2-1/4. More than half of the company's 26.8 million shares changed hands during the day.

The investment caught the attention of both the industry and Wall Street, in part because of General Magic's colorful background. The company once was considered a promising high flyer, pitching an ambitious operating system for handheld devices called Magic Cap. (See related story)

General Magic's chief offering today, a service code-named Serengeti, is scheduled to become available this summer, and General Magic has integrated it to work with Microsoft applications, including Outlook email and collaboration software, its Schedule calendaring application, and Internet Explorer. Serengeti also will work with WebTV and devices running the Windows CE operating system.

Microsoft said the technology licenses are for research purposes and won't show up in products for several years, but both sides declined to name the technologies licensed.

Serengeti allows users to pick up phone and email messages over the telephone and integrates faxes, address book, calendar, news, and stock quotes. That information can be obtained by phone or through a Web browser.

General Magic has said it expects to market the product through telephone carriers, Internet service providers, and other distribution partners that would add it to their services.

"General Magic is all about simplifying the way people access and control the information they need to be successful," company chairman Steve Markman said in a statement. "Our goal is to make Serengeti the preferred service for people who need access to their information at any time from any location."

Serengeti is based on General Magic's patented software agent technology, which the company has been seeking to commercialize for years.