Updated from 8:23 a.m. EDT

Microsoft

(MSFT) - Get Report

will take a minority stake in ContentGuard, a

Xerox

(XRX) - Get Report

spinoff company devoted to selling software to protect intellectual property on the Internet, the companies said Thursday.

The software company will have a minority stake, and the copier company said it expects other investors to sign on.

The new company will focus on products intended to protect intellectual property online.

The decision to form a new venture rather than simply share technology is a signal that the companies plan to eventually sell shares in the new company, said Gregory Gieber, analyst for

Brown Brothers Harriman

.

Xerox has a long history of creating profitable ideas that it has failed to translate into profits, said Gieber, citing the computer mouse and the laser printer.

"The old culture of Xerox is a culture of copier salesmen," Gieber said. "That culture doesn't work anymore."

The association with Microsoft could help Xerox both financially and in terms of public image because the software giant excels at marketing and turning ideas into money makers, he said.

Microsoft shares gained 1 1/2, or 2%, to 69 1/2 Thursday. (Microsoft finished up 1 13/16, or 3%, at 69 13/16.) They fell considerably this week

after the software company released quarterly financial results showing revenues that fell short of analysts' expectations and the

Department of Justice

prepared to propose breaking up the company to remedy antitrust violations.

Xerox shares fell 3/4, or 3%, to 27 1/4 Thursday amid a drop in the

Dow Jones Industrial Average

. (Xerox closed up 15/16, or 3%, at 27 1/16.) Several analysts filed positive reports on the company this week after the copier company, which has stumbled in recent quarters, reported

earnings that exceeded the consensus expectations of analysts polled by

First Call/Thomson Financial

.