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MSFT sells RealNet stake
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November 18, 1998: 5:06 p.m. ET
Companies had falling out over streaming software compatibility
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NEW YORK (CNNfn) - Microsoft Corp. Wednesday said it will immediately begin selling its minority stake in Internet multimedia software maker RealNetworks Inc.
The two firms had a falling out last summer after RealNetworks Chief Executive Robert Glaser accused Microsoft of deliberately taking measures to "break" his company's flagship RealPlayer software.
Microsoft, which owns a 10-percent stake in Seattle-based RealNetworks, recently released Windows MediaPlayer, its own software for streaming video and audio files over the Internet. MediaPlayer is based in part on technology licensed from RealNetworks.
Microsoft said in a statement it first notified RealNetworks in June that it was considering selling its stake. The company said it offered to work with RealNetworks on an underwritten secondary offering but the companies could not agree on the terms of the offering.
In July, Glaser - a former Microsoft executive - testified before a Senate Judiciary Committee hearing that MediaPlayer interferes with the operation of RealPlayer, forcing users to switch to Microsoft's product.
Microsoft said in a statement that the companies agreed in July 1997 to enhance interoperability between their competing streaming products. Now, Microsoft said, the companies "have decided to accelerate their innovations and improvements in different directions."
"Microsoft and RealNetworks are each developing exciting technologies, but the rapid pace of innovation and our competing visions for streaming media means our investment in RealNetworks no longer makes sense," said Greg Maffei, Microsoft chief financial officer.
RealNetworks officials were not available for immediate comment.
Microsoft (MSFT) shares closed at 109-3/4, off 2-1/8. RealNetworks (RNWK) shares rose 1-5/8 to 42-7/8 before sliding to 36-1/2 in after-hours trade. 
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