Microsoft CFO Says Financials On Track

Answering critics who expected Microsoft to join Intel in issuing a financial warning for the current quarter, Microsoft Chief Financial Office (CFO) John Connors said Friday that his earnings expectations hadn't changed. However, Connors did note that Microsoft is concerned about the worldwide economic slowdown--which some analysts have glumly predicted could last well into 2002. Connors' comments came during an investment conference in Seattle.

"The expectations we set haven't changed from our January 18 earnings call," Connors said, "but as we mentioned in our October call, and as we mentioned in our January call, we sell products and services around the globe, and we are not immune to economic downturns." Connors wouldn't elaborate on Microsoft's quarterly earnings. During the January 18 earnings call he mentioned, Microsoft slightly lowered the quarter's financial expectations to 42 to 43 cents a share--the same as financial expectations for this quarter last year.

On the same day that Microsoft declined to revise its earnings estimates for the quarter, two brokerage firms lowered their estimates for the company's earnings and revenues, citing close ties between Microsoft and Intel, which issued its own earnings warning earlier in the week. Several other high-tech companies such as Yahoo! and Sun Microsystems also have recently lowered expectations.

Later this year, Microsoft hopes to jumpstart PC sales and revive the high-tech segment with the one-two punch of Windows XP and Office XP releases. Office XP is due to ship in May, and Windows XP should become widely available by September. Friday, Connors noted that to spur Office XP migrations Microsoft soon will start a corporate incentive program. Details of the plan are unknown at this time.

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