Microsoft Sales to Fall Short on Office Delay

Microsoft Corp. said Thursday that it expects to report a $400-million revenue shortfall in the March quarter and post sales far short of analysts’ projections because of a four-month delay in the introduction of Office 2000, the next generation of the popular suite of word-processing and spreadsheet software.

Chief Financial Officer Greg Maffei said the Redmond, Wash.-based company will defer $400 million in revenue in its fiscal third quarter ending March 31. The revenue must be deferred because the company issued coupons to buyers of Office 97 that can be redeemed for a free upgrade to Office 2000 when it is available. Maffei expects to report most of that revenue in the fiscal fourth quarter.

Office 2000 was originally expected to be in stores by the end of March, though in November Microsoft moved that introduction to the end of June because of software snags. The shortfall could affect Microsoft’s shares. Last month, Dell Computer Corp., the largest direct seller of PCs, reported that revenue rose a less-than-expected 38% in its fourth quarter. Dell shares then declined 21% over three days.

Microsoft said the deferral could reduce earnings by 10 cents per share in its third quarter and boost earnings by 10 cents in its fourth quarter. The company still expects to meet consensus estimates of 65 cents a share in its third quarter because of investment gains. Analysts had expected revenue to reach as much as $4.9 billion.

“The business is fine and [personal computer] demand is definitely there,” Maffei said.

Microsoft shares rose 6 cents to close at $161.44 on Nasdaq. The disclosures were made after regular U.S. trading.