Microsoft Corp. is buying Great Plains, one of its long-time software partners.

The stock deal, valued at about $1.1 billion, will help Microsoft, Redmond, Wash. move into the accounting space and also build momentum for Microsoft's .Net initiative, according to a statement posted on the Microsoft website.

Microsoft and Great Plains have been allied before. In 1994, Microsoft contracted Great Plains, Fargo, N.D., to develop a low-end accounting package to compete with Intuit's QuickBooks. But in what some called an unprecedented defeat after slow sales, the rights to the software Microsoft Profit reverted to Great Plains. Microsoft subsequently launched a bid to acquire Intuit that it dropped in the face of regulatory concerns.

Accounting has been a problem area for Microsoft. While the company had some success in home finance after spending millions and years developing Microsoft Money to compete with Intuit's Quicken, it never had a viable entry in accounting at any level, observers said.

Some thought the Great Plains deal surprising. "For the life of me, I don't see what Great Plains gives Microsoft in the enterprise. Great Plains has a high-end product but it's for mid-sized and small standalone businesses," said Jeff Tarter, editor of SoftLetter, Watertown, Mass.

But Great Plains will give Microsoft a stable of programming talent and entry into accounting, according to the company statement.

"In 19 years of operations Great Plains has proved to be one of Microsoft's most innovative partners," said Steve Ballmer, president and CEO. "Microsoft and Great Plains see the future of business applications for small and medium-sized companies in the same way."

Great Plains will become the Great Plains Division, reporting to Jeff Raikes group vice president of Microsoft's Productivity and Business Services Group. and David Vaskevitch, senior vice president of the Business Application Division.