Bloomberg News 10:42PM
Microsoft Sees Revenue Growth Slowing on PC Sales (Update1)
Seattle, July 23 (Bloomberg) -- Microsoft Corp., the top
software maker, said revenue growth will slow in the fiscal year
that began on July 1, dragged down by weaker personal computer
sales and market saturation for some of its products.
>Revenue also will come under pressure from the turmoil
in
Asia, Chief Financial Officer Greg Maffei said at a meeting with
financial analysts. The so-called year 2000 glitch, in which
computers fail to recognize the year 2000, will put a damper on
software sales, too, he said. Uncertainty over whether software
programs can cope with the change in millennium will cause some
companies to delay orders, he said.<P>Microsoft also expects that saturation sales of some of its
products, such as the Office 97 package of business software,
will contribute to slower revenue growth. It does expect to sell
more upgrades for these products, which bring in less revenue
than new programs.<P>Microsoft, which traditionally uses its meetings with
financial analysts to lower expectations for its performance,
warned that the new fiscal year will see heavy investments in the
company's Internet ventures. In addition, its costs of goods sold
will rise this year, after falling in recent years, he said.
''Growth of this company will not be as high in the future
as it has in the past,'' Chairman and Chief Executive Bill Gates
told analysts. ''The number of PCs are a big part of our model
and that rate is slowing; that slows us down.''<P>Still, Microsoft is ''in the best position of any technology
company,'' Gates said.<P>The Redmond, Washington-based company gets the same amount
of revenue for its software installed in new PCs regardless of
the drop in PC selling prices, said Microsoft President Steve
Ballmer. He declined to say how much Microsoft gets from each PC
sold.<P>Gates' comments were echoed by the characteristically
cautious Maffei.
''Growth is coming down and down substantially from where we
were in fiscal 1998,'' Maffei told analysts.<P>Microsoft fell 3 3/4 to 113. The executives' comments came
after the close of U.S. markets.
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I hope we don't tank tomorrow, and if we do, that 100,000 "stop loss" order was ominous, making the kiss of death forecast a reality. |
