Intel, Digital Close to Settling Patent Dispute

Intel Corp. and Digital Equipment Corp. are close to announcing an out-of-court settlement of their patent dispute, valued at about $1.6 billion, possibly as early as today, analysts said. Ashok Kumar, a Loewenbaum & Co. analyst, told clients that the settlement includes an agreement allowing Intel to license Digital’s Alpha microprocessor architecture technology. Intel would also help Digital develop products based on the Alpha architecture. In return, Intel would pay Digital about 50% of the settlement in cash and give Digital discounts on Intel microprocessors. Kumar estimates the discounts could be worth about $100 million a year--up to $700 million over several years. An Intel spokesman in Santa Clara said he could neither confirm nor deny that the two were in talks to settle the dispute. A spokesman for Digital in Maynard, Mass., declined to comment. Both companies’ stocks advanced. Digital rose $2.25 to close at $51.25 on the New York Stock Exchange, and Intel rose $1.06 to close at $85.13 on Nasdaq.