Microsoft: Lawsuit a possibility

Microsoft and regulators aren't saying much about their closed-door settlement talks in Washington, but a regulatory filing today by the software giant says the company believes that a lawsuit is "likely" if talks break down.

"The [Justice Department] and a group of approximately 19 state attorneys general have requested information from Microsoft concerning various issues," the "10-Q" filing with the Securities and Exchange Commission today reads. "The parties currently are exploring whether a negotiated settlement can be reached.

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"If it cannot, management believes it is likely that a lawsuit will be filed, but it is impossible at this time to determine its scope or outcome. We do not believe such an action would include claims for damages against Microsoft."

Today's SEC filing underscores the uncertainty of the outcome of the high-stakes legal battle.

As reported, Microsoft began settlement talks today in Washington with the DOJ and state attorneys general, as it faced the threat of one of the largest antitrust cases in U.S. history. The regulators were prepared to file the suits yesterday but postponed action after Microsoft agreed to make concessions and delayed shipment of its Windows 98 operating system to computer makers until Monday.

Talks have adjourned for today, but are scheduled to resume tomorrow, a spokeswoman for the Justice Department said.

Shipment of the OS to PC makers had been set for today. The company still plans to ship Windows 98 to retailers on June 25.

Also today, Microsoft declared a regular quarterly dividend on its preferred shares. Its stock was trading up half a point, at 87.44.