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

To: t2 who wrote (23581)	6/3/1999 9:21:00 PM
From: taxman	Read Replies (2) \| Respond to of 74651

Redmond, Washington, June 3 (Bloomberg) -- Microsoft Corp. will officially unveil its Office 2000 package of business software Monday, hoping the upgraded product continues to be a cash cow for the world's biggest software maker. Microsoft President Steve Ballmer will introduce the first upgrade in two years of the Office 97 group of word processing, spreadsheet and e-mail programs that's built an 89 percent market share. Office 2000 will be available in stores June 10. It's been available to large corporate customers since late April. The Office line has long accounted for about a third of Microsoft's overall revenue, which amounted to $14.5 billion the fiscal year ended last June 30. Office 2000 is likely to keep up that momentum, analysts said. ''Because of the big numbers, I'm sure Office 2000 will be a massive cash generator,'' said Chris LeTocq, director of software consulting at Dataquest Inc. ''It's likely that it will be bigger than Office 97.'' The Office line will generate $5.75 billion of revenue in the year ending June 30, 2000, according to J.P. Morgan analyst William Epifanio, who has a ''buy'' rating on Microsoft. That would be an 11 percent increase from this year. Office 2000 lets users exchange documents over the World Wide Web, including real-time collaboration, to capitalize on the growing use of the Internet in corporate communications. Data can be created and managed on the Web and personal computers. ''We're trying to make it as easy to save documents to the Web as it is to save documents on the desktop,'' said Steven Sinofsky, vice president of Microsoft Office. Simplifying the upgrade process also was a key goal, because the upgrade to Office 97 from Office 95 was criticized by some as too complicated. ''We wanted to make the upgrade as seamless as possible,'' said Sinofsky, noting that Office 2000 is based on feedback from customers that began shortly after Office 97 was released. Y2K Influence The Year 2000 bug also is an issue, since the product being released six months before the turn of the millennium, analysts said. The bug results from the inability of some software to read the Year 2000, seeing only the last two digits of the year and mistaking 2000 for 1900. ''It will have a dampening effect,'' LeTocq said. ''Organizations are starting to think 'Let's not change our desktop now.''' Still, from 5 percent to 8 percent of Office users will upgrade in the first year, which would be a higher percentage than for Office 97, LeTocq said. Office is several months late in reaching the mass market, forcing Microsoft to defer $400 million in revenue to its fourth quarter ending June 30 from the third quarter. The revenue can't be recognized until customers receive the product, having paid for it when purchasing Office 97 and receiving an upgrade coupon. Retail prices for Office 2000 range from $209 for the small business upgrade version to $799 for the premium version for new users, which includes extra software such as FrontPage for creating Web pages. Office's distant rivals, including Corel Corp., hold only 11 percent of the market and have been unable to increase their share because of companies' desire to install uniform software and personal-computer makers' pre-installation of Office. Redmond, Washington-based Microsoft fell 2 1/16 to 76 3/8. Corel fell C$0.02 to C$4.28 in trading in Toronto. ©1999 Bloomberg L.P. regards