Make Way for Microsoft

Moreover, most versions of Vista are more expensive than corresponding versions of older versions of Windows, so revenue and margins will both get a boost -- but not immediately.

Most analysts who really understand how large businesses purchase technology believe the new software won't be a massive seller until late 2007 or 2008. That's because IT budgets aren't what they used to be, and in any case, moving to a new version of an operating system takes lots of time to test against the myriad other software programs already in use.

Still, there's plenty of enthusiasm on the buy side.

Brent McGibbon, principal of McGibbon Asset Management and a holder of the stock, has been impressed with the company's success in the gaming arena. He figures Microsoft may realize a profit on the Xbox 360 ahead of its 2008 target and praises the company for "its innovative work," not a phrase generally associated with Microsoft.

His price target: "Maybe as high as $50 in the next 12 to 18 months."

Read the Fine Print

Because Vista and the newest version of Office software are shipping so late, Microsoft opted to give customers an upgrade coupon for both products. It was probably a smart move from a marketing perspective, but it creates a number of complications related to revenue recognition.