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WordPerfect 'bloodied and battered' before Novell buyout, former exec testifies

SALT LAKE CITY — Like a basketball team before a big game, six WordPerfect employees one day at lunch put their hands together and made a formal declaration of war against Microsoft.

Former WordPerfect Executive Vice President W.E. "Pete" Peterson had his hand on the pile that day. He feared his thriving company could lose the software battle to its bitter rival as Windows began to emerge as the preferred computer operating system in early 1990s.

WordPerfect ruled the DOS market, but wasn't doing well in the burgeoning Windows world.

"I didn't want to like it, but our customers started to use it," he testified Wednesday in U.S. District. "I believed we needed word processing for Windows to be successful."

Microsoft called Peterson to the witness stand in its defense against anti-trust allegations brought by Provo-based Novell in a federal lawsuit. The Redmond, Wash., computer giant contends WordPerfect was already in decline when Novell bought it in 1994 for $1.4 billion and sold it two years later for $145 million.

Novell claims Microsoft duped it into using some computer code for developing a Windows word processing application that Microsoft decided not to use in its product. That decision, says Novell, prevented it from timely releasing software for Windows. Novell is seeking at least $1 billion in damages.

Microsoft argues Novell was slow to recognize the emergence of Windows and that customers ultimately preferred Microsoft products.

The jury trial began Oct. 18. Closing arguments could come next week.

Peterson was a member of the triumvirate that ran then Orem-based WordPerfect, the others being Alan Ashton and Bruce Bastian who each controlled 49.5 percent of the company. Peterson, who ran the day-to-day operations, controlled 1 percent. Ashton and Bastian were not called to testify in the trial.

Peterson left WordPerfect in March 1992 and two years later published book about its rise and fall titled "Almost Perfect." It sold fewer than 10,000 copies.

On Wednesday, he testified that he believed it was WordPerfect's "destiny, calling, stewardship and contribution to the world" to create "wonderful" software.

Peterson said he saw the company as a "bloodied and battered" body in need of patching up just before he quit.

Rather than going on a marketing spree to compete with Microsoft, he said that he wanted to conserve the $400 million to $500 million WordPerfect had in the bank and write better software for Windows.

"We needed to live to fight another day," he said.

Under cross examination, Peterson said Microsoft sent WordPerfect mixed messages about developing software for two different operating systems.

Peterson said Bill Gates told him at a conference to write for Windows, while Microsoft developers were telling him to write for OS/2, a joint Microsoft-IBM venture.

"They were talking out of both sides of their mouth," Peterson said.

In writing applications for Windows, he said, WordPerfect followed rules set down by Microsoft only to find out later Microsoft took shortcuts to make its products run faster.

Asked if WordPerfect developers were adept at following rules, Peterson said, "Unfortunately, yes. They were rule followers."

At same time, Peterson said WordPerfect was biased toward OS/2. "We absolutely didn't like Microsoft or any of its products, so we wanted OS/2 to win," he said.

Peterson said he thought WordPerfect could right itself in-house, but Bastian apparently wanted to look outside the company.

In an email to Bastian a month before he left, Peterson wrote, "Who is going to save us if we don't? Do you think there is someone out there who can come in and make us successful? I doubt it."

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