With the Dow off 99.67 at 4,586.61 in early trading, Friday was shaping up as Technology Meldown Day, and Microsoft Corp, which had been at $108 at the beginning of the week, had plunged $10.375 to $91.50, while IBM Corp was off $6.375 at $100.625, and Intel Corp was off $8.375 at $64.875. Micron Technology Inc, which is positioned as a winner almost regardless of what happens at any of its rivals, was off $6.25 at $55, while Motorola Inc was uninterested in gossip of a big order from Sprint Corp, news of which had banged L M Ericsson Telefon AB’s shares in Stockholm and taken that market with it, and slumped $7.25 to $68.875. In fact, Sprint had spurned time division for code division multiple access technology, but not chosen a supplier from Motorola Inc, Northern Telecom Ltd and AT&T Corp; Ericsson does only time division gear. Much of the blame for the market mayhem could be laid at Microsoft’s door: the company’s annual financial meeting is always steeped in gloom, which doesn’t matter when the market is going nowhere much anyway, but matters a great deal when shares are looking toppy and the whole edifice appears decidedly unstable. It’s great to have the opportunity to share all our nightmares and fears about the business, chairman Bill Gates joked at the meeting. But with the imminent launch of the Windows 95 operating system and an expected huge cycle of upgrade revenues, executives were hard-pressed to find cautionary things to say about the fiscal year that began on July 1, notes Reuters – so they turned to fiscal 1997. Steve Ballmer, executive vice-president, raised eyebrows when he said the company’s revenue in the year that ends June 30 1997, could show no growth over the fiscal year just started due to the tough comparisons.Analysts were unsettled by the remark, although they did not take it literally – most expect revenue to grow 30% in the current fiscal year over last year’s $5,900m and perhaps another 25% the following year. Gates, asked to clarify Ballmer’s remark, conceded that many of Microsoft’s product lines could be expected to grow in fiscal 1997, including the Windows NT high-end operating system as well as CD-ROMs and other products aimed at home consumers. Ballmer added that the company’s applications face the spectre of hyper-aggressive price competition from companies such as Novell Inc and the combination of Lotus Development Corp and IBM Corp: We face some desperate competitors, Ballmer said. The company also said it expects to spend $100m this fiscal on the Microsoft Network, and does expect some revenue in the year from the network, and it said that sales of Windows NT rose 300% in the latest fiscal year, with the rate increasing in the fiscal fourth quarter. Bob Herbold, executive vice-president and chief operating officer, said advertising spending could range from $100m to $200m.
