Microsoft Corp has issued a profit warning – of sorts – for its third quarter, due to be reported on April 22nd. Although Microsoft says it will more than likely beat analysts’ estimates, of earnings per share growth of 44%, by up to four percentage, points, it says that will likely mark the high watermark for earnings per share during calendar 98. Microsoft’s chief financial officer Greg Maffe said that the company faced at least three quarters of slower growth. The main cause is the huge explosion of Office 97 and BackOffice sales last year, which can’t be maintained, he said. This year’s Windows 98 launch, scheduled for June won’t be the retail phenomena that Windows 95 was, he said, as it lacks the user interface and 32-bitness that appealed to retail customers last time. And the next version of Office is not due until next year at the earliest. Although NT was growing nicely, that too, was slowing, he said. NT 5.0 and its associated BackOffice components should be released to beta this summer, and reach its final version six to nine months later. Maffe expects revenue growth next quarter of around 17% or 18%. Forward P/E is too high, he said but analysts don’t seem to care. Maffe said Microsoft hadn’t noticed a significant decline in demand for PCs, although it admitted that it was a lagging indicator.
