Investors cool to Microsoft

Microsoft's CFO says Office 97 will add revenue growth in the coming year, but investors were not impressed.

CNET News staff
2 min read
SAN FRANCISCO--Microsoft's (MSFT) chief financial officer said today that Office 97 will add revenue growth in the coming year, but at least some investors who heard his remarks at an investment conference were not impressed.

Office 97, which will hit the streets next month, is expected to bolster the software giant's financial performance in the coming quarter, CFO Mike Brown told investors at Montgomery Securities' 14th annual Technology Week in San Francisco.

"It's very exciting. We're going to have our biggest upgrade to Office in years, and this will be the start of the upgrade cycle," Brown said in an interview with CNET.

But a handful of investors were not wowed by the the Office 97 presentation and said they will take a careful look at Microsoft's revenues in the coming quarters.

"Because Office 97 is a near all-or-nothing situation for people looking to upgrade, Mike [Brown] said it will induce more choppiness in sales for the next few quarters. They have a lot of large corporate customers, so if you get one big company buying the software one quarter and not the next, there can be large swings," said Florian Schonharting, senior portfolio manager with Bank Invest, a Denmark mutual fund.

Schonharting attended a meeting later in the day with Brown that was restricted to investors and representatives of Wall Street. "One should be careful in interperting the numbers," Schonharting said.

And when Brown was asked about expectations of customers converting to Office 97 at the same rate as those flocking to its Windows 95 operating system, Schonharting said Brown intimated that it would be at the same speed. Microsoft has seen about 25 percent of its customers upgrade to Windows 95, since its launch a year ago.

Schonharting said the product demonstration of Office 97 showed few exciting new features, other than its ability to link to the Internet.

"Their strategy is promising if they can integrate the Internet with their applications," he said, adding that his firm is evaluating whether to take a stake in Mircosoft.

Investor Phil Bradley, who holds a small personal stake in Microsoft, said the Office 97 demonstration was interesting, but he found the presentation overall lacked useful financial information.

Brown, however, said his comments were restricted because the company is in a "quiet period" due to its preferred stock offering.

Meanwhile, Microsoft saw its stock jump about 7 percent today on the first trading day after its two-for-one stock split. Microsoft shares closed at 81-3/4, up 5-3/8.