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Microsoft forecast: dreary
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July 24, 1997: 12:05 p.m. ET
Software giant still points to market saturation and slowing profit growth
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NEW YORK (CNNfn) - Microsoft Corp., known throughout the financial community for its conservative business outlook year after year, isn't likely to disappoint the pessimists when company officials meet with Wall Street analysts Thursday.
The software giant's top officials, including Chairman Bill Gates, are expected to warn financial analysts meeting in Redmond, Wash., that market saturation will slow growth, according to published reports.
In addition, company officials also are expected to warn that a 30-percent jump in sales and marketing expenditures could put pressure on profitability. Overall research and development spending is projected to rise to $2.6 billion from $2.2 billion.
Despite the routine pessimism of Microsoft's forecasts, investors appear to be taking the remarks to heart. On top of Wednesday's 2-11/16-point drop, shares were down another 3-15/16 points at 137-1/2 in heavy Nasdaq trading at midday.
The regularly scheduled meeting comes as Microsoft formalized its strategy for rolling out Windows 98 -- the next version of the Windows 95 operating system which is currently in beta testing under the code name "Memphis." It also follows last week's release of sharply higher profit and revenue figures.
The current fiscal year, though, will not see any major product releases, said Greg Maffei, treasurer. As a result, the company doesn't expect to recognize significant revenue from its product cycles until after June 30, 1998.
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