Microsoft confirmed Saturday that it had worked with informants, U.S. Secret Service, the FBI, and German law-enforcement agencies to arrest the alleged author of last week's Sasser worm.

Late Friday, The Associated Press reported that German police had arrested an 18-year-old German high-school student in connection with the creation of the worm.

If convicted, the young man faces five years in jail for violating Germany's computer-sabotage laws. The computer industry is tallying the damage caused by Sasser. The global economic impact of the Code Red worm, which struck in July 2001, was estimated by the research firm Computer Economics to be $2.75 billion, while the Blaster worm, which infected millions of desktops and servers in August, is estimated to have cost $750 million worldwide.

According to Microsoft's statement, what the informants said related not only to the Sasser worm and several of its variants, but also to the Netsky worm, which was released Feb. 16. German authorities believe Sasser's creator also made and released 28 variants of the Netsky worm, according to Microsoft.

Microsoft released a statement saying it will reward the informants with $250,000 pending conviction of the suspect.

IT security experts say the arrests show Microsoft's reward program, which was unveiled last year following the Blaster worm, can deter future attacks.

"Money talks and this is real money to the people writing these viruses and worms," says Pete Lindstrom, research director with Spire Security. "These are the types of breaks you need to catch these guys."