All Eyes on Microsoft

With the software giant reporting earnings Tuesday, analysts are keen to see how Windows 2000 is faring.

Author:: Michael Brick
Publish date:: Jul 17, 2000 6:03 PM EDT

With the software giant reporting earnings Tuesday, analysts are keen to see how Windows 2000 is faring.

Wall Street is expecting

Microsoft

to report earnings of 42 cents a diluted share late Tuesday afternoon and revenue of $5.66 billion, according to analysts polled by

First Call/Thomson Financial

In addition to these numbers, several analysts indicated Monday they would scrutinize the software giant's sales of Windows 2000.

The server operating systems debuted to much

ballyhoo in February, but some information technology managers have been slow to

adopt it. They have cited concerns about a

federal judge's order that the company split itself in two to remedy antitrust violations.

"Microsoft contends that the ramp-up is close to plan, but several other analysts have mentioned that 3 million copies sold by the end of June is somewhat disappointing," wrote

Rich Scocozza

, an analyst for

Bear Stearns

Scocozza expects earnings of 41 cents a diluted share and revenue of $5.771 billion. The variation from the Street's consensus is due to an "uptick in the PC business during June reported by

Hewlett Packard

(HWP)

," he wrote in a report Monday.

Michael E. Stanek, analyst for

Lehman Brothers

, also expects 41 cents a diluted share in earnings, but projects revenue of $5.75 billion.

"We still view this as a back half story, with the first signs of acceleration from Windows 2000 deployments coming in the month of September," he wrote.

Despite its name, Windows 2000 is intended to replace the business software Windows NT, not necessarily the consumer software Windows 98. Its marketing campaign, an appeal to back-office systems managers, contrasted with the debut of the consumer software Windows 95, which was promoted with a backdrop of outsized product boxes and the earthy electric guitars of the

Rolling Stones

Start Me Up.

For analysts, that means judging the products success requires more than checking the retail sales figures.

The operating system, in general, attracts attention because it has been Microsoft's centerpiece product from which the company has built itself on. But at the same time, the Windows 2000 version, released nearly a year behind schedule, is just one part of the company's operations.

Analysts will also press the company for speculation about its .NET initiative, the still nebulous plan surrounding marketing software online.

And discussion of the antitrust suit brought by the

Department of Justice

seems likely. The company is due to file a statement on July 26 arguing that its appeal of the case should be heard by the

U.S. Circuit Court of Appeals for the District of Columbia Circuit

, not the

Supreme Court

Shares of Microsoft closed regular trading down 3/4, or 0.95%, at 78 3/16 Monday.