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INTERGRAPH SETTLES INTEL SUIT

As reported by Adam Peeler, the maker of engineering software said Intel has agreed pay it $300 million to settle a five-year-old patent lawsuit. Investors, perhaps looking for a sweeter deal, pushed Huntsville, AL-based Intergraph down 11%The maker of engineering software said Intel has agreed pay it $300 million to settle a five-year-old patent lawsuit. Investors, perhaps looking for a sweeter deal, pushed Huntsville, AL-based Intergraph down 11%

Intergraph Corp tumbled after the maker of engineering software said Intel Corp agreed pay it $300 million to settle a five-year-old patent lawsuit.

Investors, perhaps looking for a sweeter deal, pushed Huntsville, AL-based Intergraph down 11% to $15.02 on volume of $2.7 million. The stock trades in a 52-week range of $8.25 - $18.30. Intel closed down 1% at $28.11.

Under the deal, Intergraph's lawsuit against Intel will be dismissed in lieu of the $300 million payment and potential damages against Intel in another case that's pending will be restricted. Intergraph said it still intends to push forward with its second lawsuit, which will go before the Texas courts July 1, 2002.

The companies also agreed to a cross-licensing agreement and Intergraph consented to sell undisclosed patents to Intel.

Intergraph first sued Intel in 1997, alleging that Intel violated patents Intergraph held on its Clipper processor. Intergraph claimed Intel used the technology improperly in its Pentium processor. That case was officially dismissed after the settlement.

Intergraph cried 'patent infringement' again in July 2001. This time, the alleged infringement related to parallel instruction-computing technology that is a critical aspect of Intel's Itanium processors, which are for workstation computers and high-end servers. Unless another settlement is reached, this suit will be fought in court this summer.

Today's deal established a scale of damages for the Itanium suit. Intel and Intergraph agreed to cap the damages at $150 million should Intergraph win the lawsuit. If Intel loses an appeal of an Intergraph victory, it could be liable for up to $250 million in damages. If Intel wins in the first trial, it pays nothing.

"We believe that this settlement demonstrates the validity and value of our patents," stated Intergraph CEO Jim Taylor. "Now that we have resolved the Alabama litigation, we can realize additional value for our intellectual property through open licensing agreements with others in the computer and electronics industries."

Two weeks ago, the courts ordered both companies to continue discussions in pursuit of a settlement, Intergraph officials said last week.

On its Website, Intergraph said that at this time, it does "not know of any other infringing products" in the marketplace, but it believes "that configurable parallel processing architectures are beginning to be used in a variety of ways."

In the past, Intergraph estimated in that its related legal bills were about $1 million a month to take on mighty Intel.

Company spokesperson Jeannie Robison told smallcapcenter.com that the costs fluctuate but have recently been hovering around a half million a month. She said management discussed aborting the lawsuits if not enough progress was being made. But, she said, the company decided it is fully committed to taking on the $193 billion Intel.

Intergraph, which has moved away from its workstation and server business, is now focused on mapping and design software for governments and global industries in the power, marine, offshore and utilities sectors.

UBS Warburg analyst Tom Thornhill covers Intel. He told smallcapcenter.com that he wasn't up to speed on the Intergraph lawsuit.

"Nope, I'm not familiar with it," he said. "So I really can't comment on it."

That may change. Intel, the world's largest microchip maker, said it will take a one-time charge on first-quarter earnings of about $150 million, representing about half of the $300 million payment. Intel is scheduled to report its first-quarter earnings tomorrow.

Calls to Thornhill were not returned by publication time.

According to First Call, Intergraph has no analyst coverage despite its market capitalization of $774 million.

Smallcapcenter.com's advanced research department gave INGR a signal stockscore of 62.

A company's stockscore is an unbiased summary of numerous technical analysis indicators like volume and momentum, which are combined to produce a value on a scale of 1-100 with 100 being the highest level.