Friday, March 12, 1999

"Pick battles big enough to matter, small enough to win." -- Jonathan Kozol

Latest Market Numbers

Microsoft to Defer Sales

Microsoft (Nasdaq: MSFT) announced that it expects fiscal third-quarter revenue to fall short of estimates of $4.65 billion as it shifts $400 million in anticipated sales to the fourth quarter due to a delay in the launch of Office 2000. The revenue deferral will cut earnings for the fiscal third quarter (ending March 31) by $0.08 per share, but that will actually be offset by higher-than-anticipated investment income. As a result, the software giant still expects to meet analysts' mean EPS estimate of $0.65 a share, and Q4 EPS will be around $0.08 higher than previous forecasts.

The revenue deferral hardly comes as a big surprise since Microsoft had said in November that Office 2000, originally slated to appear in stores by the end of this month, wouldn't be widely available until its fiscal fourth quarter (ending in June). Really, the shift in revenue has no real effect on the company's overall performance or the big picture that should concern long-term investors. Plus, Microsoft is notorious for being late on its software launches, which usually has little negative effect on its stock performance.

Meanwhile, The Wall Street Journal reported that Microsoft will announce a long-awaited reorganization next week that splits the company into four major groups to better serve the needs of different types of customers instead of focusing around specific product lines. The company is expected to name two managers from its own ranks to head its Microsoft Network online services. According to the Journal, Microsoft President Steve Ballmer rejected a more drastic proposal to spin off Microsoft Network (MSN) into a separate company.

Check out this week's Dueling Fools, Celebrity Deathmatch-style, between Microsoft Chairman Bill Gates and Apple Co-founder and Interim CEO Steve Jobs.

News to Go

Database software maker Oracle Corp. (Nasdaq: ORCL) reported fiscal third-quarter earnings of $0.20 a share, up from $0.14 a year ago and a penny ahead of analysts' mean estimate. But licensing sales increased just 7% to $825.8 million, sparking concern about slowing demand.

Drug maker American Home Products (NYSE: AHP) said it has won approval from the U.S. Food and Drug Administration to market its Effexor XR antidepressant drug for expanded use in treating general anxiety disorder, one of the most prevalent anxiety disorders, estimated to affect roughly 5% of people.

Internet investment firm CMGI Inc. (Nasdaq: CMGI) may start a fourth venture-capital fund this year, with $500 million to $1 billion in assets. The fund would be a late-stage and cross-over fund. Separately, the company may combine some of its assets with those of Internet portal Lycos Inc. (Nasdaq: LCOS) to make it more attractive to possible suitors. See Wednesday's Breakfast With the Fool for details on CMGI's plans for Lycos.

Internet advertising company DoubleClick (Nasdaq: DCLK) will split its stock 2-for-1, payable April 2. Check out the Fool's recent StockTalk interview with DoubleClick CEO and Co-founder Kevin O'Connor.

More Foolishness

Check out the latest StockTalk interview with Cisco Systems... Read about this Daily Double: E4L Inc... Pick the right winners in the Fool's Stock Madness contest, and you could win a trip to Florida or a Palm III organizer.

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Yi-Hsin Chang (TMF Puck), Writer
Jennifer Silber (TMF Amused), Editor