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| Saturday, 17 February 2007 | |
 MICROSOFT Corp Chief Executive Steve Ballmer said analysts' forecasts for revenue from Windows Vista in fiscal 2008 were "overly aggressive".
Ballmer's comments come two weeks after the world's largest software maker released Vista, the upgrade to its ubiquitous Windows operating system, and predicted that consumers will move to Vista faster than past Windows upgrades. In a strategy presentation to analysts, Ballmer said Vista will create a "small surge" in PC sales in fiscal 2008, but would not spur a big increase over normal growth rates. "Some of the revenue models and revenue forecasts I've seen out there for Windows Vista are overly aggressive," said Ballmer. "I don't think that much new money will race out of the consumers pockets into PCs." In January, Microsoft made available Windows Vista after more than five years of development and numerous delays. Windows runs on more than 95 per cent of the world's computers and represents the company's biggest profit driver. The Windows franchise is the centrepiece of Microsoft's business, because the company makes more than 75 cents in operating profit for every dollar of sales. The cash flow generated by Windows allows Microsoft to make investments in new business like digital music players and online services. Investor optimism about Windows Vista helped to push the shares up 30 per cent since June even though the stock has dipped in recent weeks. Microsoft shares fell 1.2 per cent in extended trading on Thursday to US$29.10 from a Nasdaq close of US$29.46. Todd Lowenstein, a co-portfolio manager for HighMark Capital Management's Value Momentum Fund, which has about three per cent of its US$1.5 billion in assets in Microsoft, said the market may have gotten a little too excited about Vista. "The stock had a good run recently and maybe it got a little ahead of the fundamentals," said Lowenstein. "There will ultimately be a migration to Vista and we think it's going to be a huge catalyst." Redmond, Washington-based Microsoft forecasts sales at the Windows business to increase 11 per cent to 12 per cent in the current fiscal year ending in June from last year's revenue of US$13.2 billion. Analysts on average expect Microsoft to generate sales of US $56.4 billion in fiscal 2008, which would be an increase of 12 per cent from this year's estimates, according to Reuters Estimates. Reuters |
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