Software truce brings comfort to Novell shares: Reports of meeting with Microsoft chief raise hopes of industry peace

SHARES in Novell, the US networking software group, rose sharply yesterday despite a profits warning, on reports of a truce in its long-standing feud with the industry leader, Microsoft.

Microsoft confirmed yesterday that Robert Frankenberg, Novell's new chief executive, met Bill Gates, Microsoft's chairman, shortly after Mr Frankenberg's appointment last month.

The stand-off between Mr Gates and Novell's founder, Ray Noorda - which began with Novell charging Microsoft with anti-competitive practices - has complicated life for corporate computer users who have replaced mainframe systems with networks of personal computers. Most corporate local- area networks employ Novell NetWare running on Microsoft's Windows and DOS operating systems.

Both firms have withheld information about forthcoming product developments and computer-programming codes from the other. As a result the two key business products do not work smoothly together, and both manufacturers have developed parallel software to overcome the problem.

Novell had also pressed US monopolies regulators to prosecute Microsoft for allegedly anti- competitive abuse of its dominance in computer operating systems. A three-year investigation by the US Justice Department ended in July with Microsoft agreeing to some relatively narrow changes in the way it offers volume discounts to computer makers who include DOS and Windows with their machines.

Mr Gates touted the settlement, which also ended an inquiry by the European Commission, as a victory. Novell complained at the time that regulators had shied away from their duties.

Yesterday's edition of the Wall Street Journal quoted an industry source as saying Mr Frankenberg had promised to stop all public criticism of Microsoft. Mr Gates and Mr Frankenberg agreed to meet twice a year, the report said.

The two firms are also to collaborate on future products, sharing information earlier in the development process.