Bristol Technology Corp yesterday said Microsoft Corp denial of full access to Windows NT source code will make the company lose up to $263m between now and 2006. Henry Stotenburg, an expert in finance and accounting whom Bristol hired to calculate the damages to its business as a result of its dispute with Microsoft, told the Connecticut courtroom Monday that he calculated the damages according to two different sets of assumptions.
The first scenario has Bristol continuing to operate under the same business plan, i.e. selling its Wind/U software directly to developers. Under that assumption, Stotenburg predicted, based on Bristol’s projected revenues, that the company would lose $130m between 1997, when the law suit was filed, and 2006.
Under the second scenario, the finance expert calculated damages Bristol would have incurred had it continued with its plan to move to selling OEM deals. At the time the tiny Danbury-based software firm brought its case against the Redmond giant, it was on the brink of penning a lucrative OEM bundling deal with SGI, the company’s CEO Keith Blackwell told ComputerWire yesterday. It was also in negotiations with both Digital Equipment Corp (which at the time was being acquired by Compaq) and Siemens Nixdorf. But all three deals fell through when the potential OEMs, who were going to bundle Bristol’s software with the operating systems and hardware, learned of the lawsuit. Revenue from those deals and others like them between now and 2006 have cost the company $263m, Stotenburg testified.
Bristol is suing Microsoft in a private law suit, accusing the number one software maker of leveraging its position in the operating system market to raise prices and force its partners to sign unfair contracts. Under a three-year licensing deal signed in 1994, Bristol was given rights to the source code of Windows NT 3.0. But when the company tried to renew that contract, Microsoft decided not to partner under the same terms, saying Bristol was only allowed access to a subset of the source code. Bristol is suing for full access to the code, as well as financial damages it says it incurred as a result of Redmond’s actions.
Anticipating Microsoft’s argument that Bristol’s revenue projections were too high, thereby leading to an inaccurate calculation of damages, Stotenburg compared Microsoft’s revenues as a start-up, during its first four years, with Bristol’s. He showed that both companies had equivalent revenue growth rates year-over-year for the first four years, Microsoft starting in 1977 and Bristol in 1992. Then, when Microsoft entered the 1980s, its revenues shot up. What he was trying to show was that it’s not inconceivable for a start-up to suddenly experience a massive growth curve after the first couple of years, Blackwell said, and Stotenburg was able to show that our projected revenues weren’t widely different from Microsoft’s at that stage in the company’s life.
Henry Stotenburg’s testimony is due to finish today whereupon Bristol’s VP of sales and marketing, Jean Blackwell, will take the stand.
