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Technology Stocks : How high will Microsoft fly? -- Ignore unavailable to you. Want to Upgrade?

To: t2 who wrote (17836)	3/12/1999 6:53:00 AM
From: puborectalis	Respond to of 74651

Microsoft to Defer $400 Million in 3rd-Qtr Revenue (Update7) Bloomberg News March 12, 1999, 12:35 a.m. PT Microsoft to Defer $400 Million in 3rd-Qtr Revenue (Update7) (Adds share prices, detail in 6th and 7th paragraph.) Redmond, Washington, March 12 (Bloomberg) -- Microsoft Corp., the world's biggest software maker, said it expects sales to fall short of estimates in its current quarter as it defers $400 million of revenue because of a delay in the introduction of the Office 2000 word-processing and spreadsheet program. Chief Financial Officer Greg Maffei said the $400 million must be deferred from the fiscal third quarter ending March 31 because it can't be recognized until customers redeem coupons for Office 2000 that were received when paying for Office 97. Analysts were expecting about $4.65 billion in total revenue for the quarter. The deferred revenue will be recognized in the fourth quarter, Maffei said. Office 2000 was originally expected to be in stores by the end of March, though Microsoft said in November that the product wouldn't be widely available until June because of continuing development work. Reaction to the revenue shortfall is expected to be more muted than for Dell Computer Corp., the top direct seller of PCs, whose stock tumbled last month after reporting that revenue rose less than expected. ''I don't see any negatives and it could end up being a mild positive,'' said Bill Whitlow, a portfolio manager with Safeco Northwest Fund, which owns Microsoft shares. ''Maybe investment income will be a little higher than previously thought.'' The revenue impact will reduce earnings per share by 8 cents in the third quarter but that will be offset by higher than expected investment income, Maffei said. The company still expects to meet consensus earnings estimates of 65 cents a share in the third quarter because of those investment gains, he said. Frankfurt-traded shares of Microsoft fell 1 percent to 147 euros. The statement was made after the close of regular U.S. trading. Shares of Redmond, Washington-based Microsoft rose 1/16 to 161 7/16. Microsoft will announce a reorganization next week, that splits the company into four groups, the Wall Street Journal Interactive edition reported. It is expected to name two managers from its own ranks to head its Microsoft Network online services. Microsoft has a cash hoard of more than $19 billion. Per-share earnings in the fourth quarter will be about 8 cents higher than analysts previously expected, Maffei said. The revenue deferral means the third quarter will see the biggest sequential drop in quarterly revenue in the company's history. In the second quarter, revenue totaled $4.93 billion. Among its upgraded features, Office 2000 relies more heavily on the Internet than previous editions. PC Demand ''The business is fine and (personal computer) demand is definitely there,'' said Maffei. ''We are seeing the usual seasonal trend in our business,'' he said. ''Nothing more or less.'' The briefing by Maffei follows Wall Street nervousness about Dell and Compaq Computer Corp. amid signs of slowing PC shipments. The software powerhouse has a reputation for managing analyst expectations to avoid unpleasant surprises. Office 2000 is the next generation of the popular group of word-processing and spreadsheet software. Analysts had expected it to be widely available in stores in the March quarter after the company said it would be released to CD-ROM manufacturers in the March quarter. Microsoft expects ''good customer demand'' for Office 2000, Maffei said. ''This is not a very large contributor to Microsoft at this point,'' said Brett Berry, a portfolio manager with Bailard, Biehl & Kaiser, which owns shares in Microsoft. ''With Dell it was a pretty big cylinder in their engine.'' 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. 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. Microsoft shares have doubled over the past year though they're down from a record high of 175 on Jan. 29. --Laura Raun in Seattle (206) 224-3173 and Greg Chang in the San Technology industries CAD/CAM \| Communications Svcs \| Computer Svcs \| Distributors \| Internet \| Networking \| PC Hardware \| PC Software \| Peripherals \| Semiconductors \| Semi Cap Equip \| Server Hardware \| Server Software \| Storage \| Telecom Wireless \| Telecom Wireline Other industries Quote lookup by symbol by name