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Regulators still mining Microsoft

Federal and state officials are continuing their investigations of the software giant that are separate from the antitrust suits.

The Justice Department and state attorneys general are continuing ongoing investigations of Microsoft that are separate from the parallel antitrust lawsuits filed on May 18, the software giant stated in a regulatory filing today.

"In other ongoing investigations, the DOJ and several states attorneys general have requested information from Microsoft concerning various issues," an amended "10-Q" filing for the quarter ended December 31 said. Those issues were not defined.

The filing reinforces previous comments by regulators, including assistant attorney general Joel Klein, that their investigation of the software giant is continuing.

Analysts have speculated that the issues under investigation could include Microsoft's Office product, its video streaming business, and Windows NT, among others. Regulators and the software giant have had no comment.

As for the pending lawsuits, Microsoft's brief for opposing preliminary injunction motions is due August 10. The regulators' reply is due on August 24. A trial on the merits of a preliminary injunction is set for September 8, the filing reiterated.

"Management currently believes that resolving these matters will not have a material adverse impact on the company's financial position or its results of operations," the company said.

The filing with the Securities and Exchange Commission also provided an update of Sun Microsystems' pending lawsuit against Microsoft, regarding the licensing of Java. Hearings on that case are set for July 31 and September 4.

The document also provided more insight into Microsoft's continued strong financial picture. It said that the royalties the company is receiving from original equipment makers (OEMs) has reached a record level, thanks to the dominance of the company's Windows operating system.

Revenue from the OEM channel was $1.21 billion in the second fiscal quarter, up 40 percent from the previous year. The primary source of the OEM revenue is the "licensing of its desktop operating systems," the filing adds.

Among some other highlights include the following:

•  The 10-Q income statement reflects a one-time write-off of $296 million for technologies under development by WebTV. The effective income tax rate increased during the latest quarter, "due to the nondeductibility of the write-off at WebTV."

•  Microsoft's cash and short-term investment portfolio totaled $10.11 billion at the end of 1997. Stockholders' equity at that time was $12.34 billion.

•  The company's research and development activities will include "investments in existing and advanced areas of technology, including using cash to acquire technology and to fund ventures and others strategic opportunities."