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Microsoft buys stake in WavePhore

The software giant buys a 2.88 percent stake in WavePhore, a close partner, but without the knowledge of the firm's management.

Microsoft (MSFT) has accumulated a 2.88 percent stake in WavePhore (WAVO).

In doing so, the software giant is buying into a close partner, but this occurred without the knowledge of WavePhore management.

"We didn't know about it until this week," said Glen Williamson, chief operating officer of the 11-year-old firm, which is working with Microsoft on pushing content to home users' PCs wirelessly using the vertical blanking interval (VBI) on PBS's TV broadcasts.

WavePhore's WaveTop service will be built into Microsoft's Windows 98 operating system and Internet Explorer. WaveTop also is available to Windows 95 users, although the consumer service remains in beta until April or May.

"This goes back to the October 1997 announcement of the partnership between Microsoft and WavePhore," said Microsoft spokesman Tom Pilla. "We're excited to have Windows take advantage of the WaveTop service, but we did not announce the terms of the agreement then, and we're not disclosing it now."

According to Bloomberg data reports confirmed by WavePhore, Microsoft bought 500,000 shares in November. That stake makes Microsoft the second-largest shareholder in WavePhore--tied with Intel (INTC), which also owns a 500,000 shares, according to Williamson. WavePhore chairman David Deeds owns 24 percent of the company.

Though WavePhore didn't know about Microsoft's investment until recently, Williamson said that it was welcome and not surprising.

"Obviously it's a form of endorsement of what the company is doing," he added, noting that the company is not up for sale.

WaveTop is primarily an ad-supported consumer service with some e-commerce revenues as well. WavePhore also distributes branded Time Warner and ZDNet content plus Reuters financial data and Dow Jones news, paid for by those companies.