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took another step Monday to cap the legal tab for its aggressive selling practices, agreeing to pay $536 million to



to settle allegations it drove the NetWare operating system out of market favor.

The agreement, which follows a similar payout in April to

Sun Microsystems

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over server software, will reduce Microsoft's already reported first-quarter earnings. It also allows Microsoft to put a rough estimate on its future antitrust exposure: $950 million, including $200 million for a class-action overcharging proceeding.

Microsoft and Novell were in private mediation over the impact of Microsoft's NT product on Novell's NetWare during the 1990s. Under the agreement announced Monday, Novell will release Microsoft from antitrust claims in the U.S. and abroad, and withdraw as an intervener in the European Commission's antitrust proceeding against Microsoft, which currently is in appeal.

Microsoft will expense an after-tax $359 million, or 3 cents a share, for the settlement, reducing its first-quarter earnings to $2.53 billion, or 23 cents a share. The company previously reported earnings of $2.9 billion, or 27 cents a share, in the quarter.

Novell rose 57 cents, or 8.3%, to $7.43 in early Monday trading. Microsoft fell 8 cents, or 0.3%, to $29.23.

One legal entanglement that is not addressed by Monday's settlement is a case Novell brought against Microsoft when it still owned the WordPerfect suite of word processing software between 1994 and 1996. Novell said it would file a new antitrust suit related to those claims this week in federal court in Utah.

Novell will seek unspecified damages arising from Microsoft's alleged efforts to eliminate competition in the office applications market during the time that Novell owned the WordPerfect word-processing application and the Quattro Pro spreadsheet application. Novell said its suit will draw on the U.S. antitrust settlement with Microsoft, in which the company was found to have maintained a monopoly on operating systems by driving out competition in related markets.

"While we have agreed to withdraw from the EU case, we think our involvement there has been useful, as it has assisted the European proceedings and facilitated a favorable settlement with Microsoft," Novell said in a release. "With the EU case now on appeal, we are comfortable with our decision to withdraw from the proceeding. There is simply not much left for us to do."

European regulators are trying to punish Microsoft after determining its marketing created an unfair advantage for several products, most notably its Media Player movie and music program. Microsoft is appealing the penalty.