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Microsoft down on tepid Win 98

After hitting all-time highs two days in a row, the company's shares fall amid concern over sales of its OS upgrade.

After hitting all-time highs two days in a row, shares of Microsoft fell more than 3 percent today amid concern that sales of the company's Windows 98 operating system would be tepid.

The successor to the blockbuster Windows 95, See special report: Windows dressing Windows 98 is considered only an incremental upgrade. By comparison, Windows 95 was Microsoft's first 32-bit system for personal computers, and it also represented a major overhaul of the software giant's operating system interface.

Interestingly, Microsoft has advised some of its corporate customers with Windows 95 that they should avoid Windows 98 because upgrading would not be cost-efficient given the inevitability of a migration to Windows NT.

Microsoft is expected to sell only 12.8 million copies of Windows 98 this year, according to a study by International Data Corporation. That estimate lies in sharp contrast to sales of Windows 95.

Two days ago, Microsoft's stock soared past the 100 mark for the first time, on news that it had won a significant victory in one of two lawsuits the Justice Department has filed against the software giant. Yesterday, the shares climbed even higher, closing at 104.93, before closing today at 101.56. During the past year, the stock has closed as low as 59.

While the court victory is significant, a second lawsuit filed by both the Justice Department and 20 state attorneys general continues. Among other things, the action seeks to stop Microsoft from bundling its Internet Explorer browser with Windows 98.

Microsoft's close today represented a 3.22 percent drop from yesterday. Meanwhile, the technology-driven Nasdaq lost 0.77 percent, while the Dow Jones Industrial Average rose 0.13 percent.