Greg Maffei, Microsoft's chief financial officer, admitted in his introduction to the quarterly results that the company has entered a period of slower growth. "Our growth has slowed for each of the last four quarters, and we are likely to experience slower growth for the balance of calendar year 1998," he said.
Previously, Microsoft had very carefully played down the quarter-on-quarter slowing of sales, pointing instead to its remarkable achievements in increasing profits when comparing with year-earlier quarters.
This quarter, on turnover of $3.77 billion (up five per cent on the previous quarter, and 18 per cent on the year earlier), the net profit was $1.34 billion (up 28 per cent from 1996-97). There was a very comfortable $12 billion - a year's income - in the bank and short term investments. At present, there appears to be very little on which Microsoft could spend such a large sum.
Maffei made the usual pessimistic noises about the future, noting that it is Microsoft's policy to be very conservative about growth forecasts. This message is largely blunted because Microsoft has played so well the game of beating the analysts' expectations.
This time, Maffei's comment was that "Asia, saturation, a maturing product cycle and the law of large numbers [by this he means the difficulty of finding significant sources of new income] have all taken their toll. This slowing trend will continue into the fourth quarter of 1998."
Maffei sees income being flat at least until the arrival of NT5. Windows 98 will not generate significant income, it seems.
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