Microsoft stock tanks on earnings warning

Bill Gates saw his company lose over 10% of its value on Friday after it lowered sales and profits expectations for the second quarter of 2001.

  • E-Mail
By  Rob Corder Published  December 15, 2000

Bill Gates saw his company lose over 10% of its value on Friday after it lowered sales and profits expectations for the second quarter of 2001.

Shares of Microsoft dropped more than 10% yesterday after the software behemoth lowered sales and profit expectations for the second quarter and fiscal 2001.

Microsoft slid 5 9/16, or 10.02%, to 49 15/16, within sight of the 52-week low of 48 7/16 and less than half of its 52-week high of 119 15/16.

Microsoft said sales for the second quarter will be $6.4 billion to $6.5 billion, 5-6% lower than the company's earlier forecasts.

In a research note, Merrill Lynch analyst Christopher Shilakes said that Microsoft's success hinges on "its ability to transition itself from a desktop software company to an enterprise solution vendor."

Windows 2000 server software has been slow to find traction in the market and analysts say the product is vital to the company because its acceptance would lead companies to buy related Microsoft products.

Still, in a conference call, Microsoft chief financial officer John Connors primarily cited weakness in desktop software as the reason for the reduced earnings expectations. Desktop platforms and applications, such as Microsoft Office, account for about 70 percent of revenues and depend, in part, on the pace of personal computer sales.

In the call, Connors said Microsoft was cutting its projections for PC growth for the fiscal year by a couple of percentage points. Previously, the company had forecast PC growth in the low- to mid-teens.

Adding to the slower revenue growth were sagging subscription and advertising sales at MSN, the company's Internet service, Connors said.

Add a Comment

Your display name This field is mandatory

Your e-mail address This field is mandatory (Your e-mail address won't be published)

Security code