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Microsoft warns Wall Street

The software giant says any legal action to delay the arrival of Windows 98 could negatively affect the entire PC industry.

Microsoft is continuing its efforts to prevent antitrust regulators from filing lawsuits that might delay the arrival of its Windows 98, reaching out to business partners and Wall Street analysts and staging a rally in New York City tomorrow that will feature speeches by Bill Gates and top executives from other high-profile companies.

The moves are only the latest attempts to stave off legal action and come as the Justice Department and up to 13 states are considering filing lawsuits that might delay the release of the upgrade to the ubiquitous Windows 95. Despite the warnings that such a delay could have serious consequences for the computer industry, one top prosecutor said the campaign was not likely to have any "substantial effect" on his state's investigation.

The newest warning came in the form of a letter Microsoft chief financial officer Greg Maffei sent to business partners today. In it, he argued that a delay of Windows 98--due to be shipped to vendors in the next two weeks and to consumers in late June--could have an adverse effect on the PC sector.

"It is always difficult to predict the economic impact of events, but should the DOJ or state attorneys general seek to interfere with the launch of Windows 98, there are likely to be broad, negative consequences not just for Microsoft but also for the entire PC industry," Maffei wrote. Computer makers, software developers, hardware manufacturers, and providers of value-added services all could suffer, he added.

His comments were similar in tone to those in a letter sent to the Justice Department last Thursday by top executives from 26 companies, including Intel CEO Andy Grove; Eckhard Pfeiffer, chairman of Compaq Computer; and Lew Platt, chairman of Hewlett-Packard, among others.

In a separate campaign scheduled for tomorrow, Gates, Microsoft's chairman and chief executive, will speak in New York City at a "A Rally for Continued PC Industry Innovation and Economic Growth." A Microsoft spokesman could not name any of the other participants, but said that they would include a number of the software and hardware company executives who signed Thursday's letter.

The Justice Department and up to 13 states have said they are actively investigating potentially anticompetitive business practices by Microsoft and are in the final stages of deciding whether to file lawsuits. As previously reported, a lawsuit could be filed as early as this week.

Tom Pilla, a Microsoft spokesman, said the campaign is designed to discourage antitrust regulators from doing anything that might delay the shipment of Windows 98.

"We hope that people will understand how important continued innovation is for the PC industry and for the customers of the PC industry, and we obviously hope, along with our partners, that Windows 98 will be released on time," Pilla added.

But Connecticut attorney general Richard Blumenthal said the efforts were likely to make little difference in his state's investigation.

"Microsoft obviously has launched a major public relations and lobbying campaign, but I doubt it will have a substantial effect," Blumenthal told CNET's NEWS.COM. "Part of my job is to listen to all points of view, which I will be doing, and evaluating closely all sides of the debate."

Blumenthal added that he and other state regulators are close to making a decision about how to proceed, but that it was nonetheless too early to discuss specific types of remedies the states might seek.

"We have not made a decision as to whether a lawsuit should be brought, let alone what remedy should be sought," he noted. "We have not ruled any sort of relief in or out."