STOCKS TO WATCH: Critical Path, Microsoft and SGI

Corel will be an issue to watch. The company said in regulatory filings that it may face a cash crunch if its merger with Inprise (Nasdaq: INPR) doesn't get approved.

The Corel disclosure, which was boilerplate in many respects, will give ammo to shareholders who oppose the Inprise merger.

Inprise shareholders have numerous gripes about merging with Corel. For starters, Corel has disappointed in recent quarters and shares have fallen along with the value of the Inprise deal. In addition, Inprise has a much better cash position than Corel.

Critical Path's volume will pick up Monday after it lost $16.8 million, or 33 cents a share, on sales of $24.6 million, beating First Call Corp.'s consensus estimate by 8 cents a share.

Ahead of the earnings report, Critical Path shares fell 2 1/2 to 45 1/8.

The $24.6 million in sales marks a stunning 2,200 percent jump from the year-ago quarter when it lost $5.4 million, or 77 cents a share, on sales of $1.05 million.

Gross profit margin for the quarter was $9.2 million, a 513 percent increase over gross margin of $1.5 million in the prior quarter.

Critical Path exited the quarter with 15.5 million outsourced mailboxes, up 40 percent from 11.1 million outsourced mailboxes at the close of the fourth quarter. The company also reported that it powers 69.8 million insourced mailboxes and 25 million wireless devices.

Its shares peaked at 88 7/16 in March after falling to a low of 19 1/2 in May.

It's hard to believe Microsoft shares are hovering below $80 a share and appear headed even lower Monday after disappointing sales and earnings Thursday.

It did beat the "official" earnings estimate by a couple cents a share, but the lack of sales growth may be disconcerting to already anxious technology investors.

Making matters worse, the company wants Wall Street to lower its expectations not only for the fourth quarter, but the next fiscal year.

After market close Thursday, the software giant reported fiscal third quarter earnings of $2.39 billion, or 43 cents a share.

First Call Corp. consensus expected Microsoft to earn 41 cents a share in the quarter.

But sales of $5.66 billion disappointed many analysts. Company executives said Microsoft was hurt by weak sales of personal computers to business in the wake of concerns about the Y2K computer bug.

Meanwhile, the bad news is piling up in the antitrust trial. The Wall Street Journal reported Monday that the company may be required to sell its Office Software unit. Office software accounts for 40 percent of Microsoft's revenue base.

U.S. District Judge Thomas Penfield Jackson reportedly wants remedy proposals by Friday. Various reports are suggesting various remedies.

The Washington Post and USA Today published separate accounts about the proposed solution, each quoting sources familiar with the case. Those two reports indicated Microsoft could be split into three companies.

Whenever Microsoft is on the ropes, the competition usually does pretty well. That means keep an eye on Sun Microsystems (Nasdaq: SUNW), Oracle (Nasdaq: ORCL) and Red Hat (Nasdaq: RHAT).

Is there any silver lining at SGI?

On Thursday, the workstation maker checked in with a third-quarter loss of $18.1 million, or 10 cents a share, on sales of $563.7 million.

First Call Corp. consensus expected it to lose 7 cents a share in the quarter.

Its shares ended off 5/8 to 7 3/4 ahead of the earnings report.

In the year-ago quarter, SGI, formerly known as Silicon Graphics, lost $40 million, or 21 cents a share, on sales of $619.2 million.

Company officials said they were disappointed with the drop in sales, which resulted from the delayed introduction of a new line of processors.

"Notwithstanding, our primary goal is revenue growth, and we remain optimistic about the future," SGI Chairman Bob Bishop said in a prepared release.

Analysts expect SGI to lose 37 cents a share in the fiscal year.