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To: D. Swiss who wrote (109120)	3/11/1999 6:19:00 PM
From: Mohan Marette	Respond to of 176387

Microsoft to defer $400 mil in revenues (0.10/share) in Q3 Drew: Check this out,will be interesting to see how the market will react tomorrow,considering it is a deferment of revenues and earnings and not a loss or really a shortfall, I think the analysts should have adjusted their revenue projections based on the delay in Office 2000. Also note it has nothing to do with PC demand for the quarter in general,it seems to me like a company sepcific accounting issue. ================================== Thu, 11 Mar 1999, 6:01pm EST Microsoft to Post $400 Million Sales Shortfall in March Quarter Microsoft to Post $400 Mln Sales Shortfall in 3rd Qtr (Update2) (Updates with additional comments from Microsoft CFO.) Redmond, Washington, March 11 (Bloomberg) -- Microsoft Corp. said it expects to report a $400 million revenue shortfall in the March quarter because of a delay in the introduction of Office 2000, the next generation of the popular group of word-processing and spreadsheet software. Chief Financial Officer Greg Maffei said the company would defer $400 million in revenue in the fiscal third quarter ending March 31. He projected $4.2 billion in revenue for the quarter, well below analysts' estimates of up to $4.9 billion. The revenue must be deferred because the company issued coupons to buyers of Office 97 that can be redeemed for a free upgrade to Office 2000 when it is available. Office 2000 was originally expected to be in stores by the end of March, though the company in November moved that estimate to the end of June. Microsoft said the revenue impact could lower earnings per share by 10 cents in the third quarter and boost earnings per share by 10 cents in the fourth quarter. The company still expects to meet consensus estimates because of gains from investments, according to Maffei. ''The business is fine and [personal computer] demand is definitely there,'' said Maffei. He made his comments on PC demand in response to concern that computer companies are seeing slowing demand. ''We are seeing the usual seasonal trend in our business,'' he said. ''Nothing more or less.'' Microsoft expects Office 2000 to be widely available by the end of June. The company expects ''good customer demand'' for Office 2000, Maffei said. The Office line of software products accounted for about a third of Microsoft's total revenue of $14.5 billion in fiscal 1998, analysts estimate. Among its upgraded features, Office 2000 relies more heavily on the Web than previous editions. Maffei also said Microsoft is seeing its business in Japan improve, though it may only be a cyclical improvement in demand because of the end of the fiscal year. ''Japan does appear to be getting a little better,'' he said.