Microsoft

(MSFT) - Get Report

was up 1.1% in preopen

Island

trading. An appeals court today is due to begin hearing arguments in the software giant's efforts to overturn a federal court ruling that the company should be split in two because it violated antirust laws. Many analysts believe the new

Bush

administration is more likely to seek a settlement.

Also,

The Wall Street Journal

reported that Microsoft is facing deceptive advertising charges for the second time in less than a year. The charges focus on a campaign targeting

Palm

(PALM)

. Microsoft is in talks with the

Federal Trade Commission

to settle the case, the paper said.