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Tuesday, October 31, 2006

Counterfeit Microsoft: What's It Worth?

Microsoft launched 55 legal actions around the world in an attempt to get software dealers to stop selling counterfeit versions of their software.

The world's largest software company says that it wants the behavior ended, but it does not say what it is costing the company now.

A recent study by the European Union says that up to 7% of worldwide commerce is based on pirated goods. That would be $300 million in lost revenue in total.

According to the latest Microsoft 10-Q, the companies two big software divisions, client and server brought in $5.8 billion in the quarter, so an annual run rate of over $23 billion. If the piracy rate of those software products is 7%, Microsoft loses over $1.6 billion a year.

That's real money.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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