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All eyes on Microsoft
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July 27, 2000: 11:39 p.m. ET
Software giant hosts analysts meeting, provides upbeat outlook
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NEW YORK (CNNfn) - Bridging the gap between its separate consumer and corporate PC operating systems, Microsoft Corp. announced Thursday that it will soon release a test version of Windows software that will give home users many of the features of Windows NT technology.
The release of the test software, dubbed Whistler, was one of a handful of new initiatives the software giant detailed at an analyst meeting held at the company's Redmond, Wash. headquarters.
Microsoft's Chief Financial Officer John Connors on Thursday said the company plans to spend $4.4 billion in the next fiscal year to develop Web-related software, wireless devices, games, the MSN network and consumer services.
That amount represents a moderation in the growth rate of the company's spending on research & development. Microsoft spent $3.78 billion on R&D in the fiscal year that ended June 30 - 27 percent more than it spent in the previous fiscal year. If Microsoft spends $4.4 billion in fiscal 2001, that would be a 16 percent increase from 2000.
Connors and other top Microsoft executives said they were confident in the company's prospects for growth in fiscal 2001, although they did not provide specific revenue and earnings guidance for the year.
Separately, Microsoft's chief operating officer, Bob Herbold, reiterated the company's contention that it will win an appeal of a federal court order to split its business in two.
That appeal was sent directly to the Supreme Court for review. Microsoft on Wednesday filed a brief with the Supreme Court in which it said the appeal should first be heard by the Court of Appeals.
"The Court of Appeals is more appropriate from a mechanical standpoint," Herbold said.
Despite a slowdown in corporate PC sales that weighed on the company's revenue growth in fiscal 2000, Microsoft executives said that business still has strong potential.
"This is a very large business that still has incredible possibilities," said Steve Ballmer, Microsoft's president and chief executive.
 Although he agreed with recent industry forecasts showing a continued slowdown in PC sales, Connors said the PC desktop generates roughly $17 billion in annual sales for Microsoft.
"It's way to soon to talk about the maturation and the death of the PC," he said.
But moving ahead, Microsoft's is shifting its business strategy to its Microsoft .NET platform, which it unveiled on June 22. That's the company's next generation of software and services through which devices connected to the Web will be able to communicate with one another.
There have been some doubts about the rollout of the .NET platform, which will occur over the next two to three years.
"Doubters may bet a week's salary against us, but I wouldn't bet the ranch," Connors said.
For fiscal 2001, Connors said sales of Microsoft's Exchange 2000 e-mail and scheduling software should begin to accelerate in the second half. He was more enthusiastic about Microsoft's SQL Server database software. "You should expect good growth from SQL 2000," he said.
The company also has earmarked half a billion dollars to launch its X-box video-game console in what is expected to be its grandest product debut ever as it seeks to unseat Sony from the top spot in the fast-growing gaming market.
Wowing the crowd with new products
To show analysts that it is making progress towards its .NET vision, Microsoft previewed the next version of its Office suite of business productivity applications, including new technologies that integrate Web services directly into Office.
The company showed features designed to make Office easier for new users to learn and tools that enable users to store, access, and analyze business information. However, executives acknowledged that Office's sales would be slower this year in comparison to last year when they released the Office 2000 upgrade.
Microsoft also previewed an upcoming server application, code-named "Tahoe," that is designed to enable groups of people to find, share and publish information. The application includes a "Digital Dashboard" that enables users to see a wide variety of information from different sources on one page on their PC desktop.
 The company also showcased a technology that will allow Web sites to communicate with one another, regardless of what programming language was used to create them. That will enable computer users to gather information from several different Web sites and display it or manipulate it on one Web page.
Microsoft (MSFT: Research, Estimates) shares ended Thursday's session 1-9/16 higher at 69-3/8, a 2.3 percent gain on the day. Meanwhile, the broader tech sector crumbled, dragging the Nasdaq composite index more than 3.6 percent lower to 3842.23. 
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