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To: nommedeguerre who wrote (19022)	5/14/1998 9:48:00 AM
From: Reginald Middleton	Respond to of 24154

<Sounds reasonable; any idea what their real earnings were last quarter? A rough figure is okay; $1 billion, -$1 billion?> They made pretty good money. MSFT's biggest problem is revenue volatility, which they smooth out with their deferrals and reserves (revenue deferral, bad debt reserves, warranty reserves, etc.). They are moving to transactional revenue models and corporate subscriptions in an attempt to remedy the problem. I don't recall off the top of my head what they made last quarter. IMO, you should be focused more on annual trends (or four quarter roling observations) which would prevent you from taking a short term view of your investments.