Microsoft Corp. shares fell in
heavy trading Friday, dragging down major stock indices, as a
study questioned whether Windows 2000 would interact smoothly
with other software.
Also raising investor concerns were comments Thursday night
from Michael Dell, chief executive of Dell Computer Corp., that chilled some of the expectations for the release
of Windows 2000, Microsoft's latest personal-computer operating
system, due to be formally introduced next week.
In afternoon Nasdaq trade, the shares were off 4 at 102,
rising off an earlier intraday low of 99-3/4. Microsoft was the
most active Nasdaq issue.
Technology consulting firm Gartner Group said in the report
one in four corporations moving to Windows 2000 would run into
problems with the new system being compatible with existing
software. The software upgrade is specifically designed for
Even so, analysts said the report raised no fresh issues.
"In reacting to the Gartner Group study, investors are
reacting to a rehash of a story that is a year old," said
Credit Suisse First Boston analyst Michael Kwatinetz.' "Are
there people out there who don't know what's going on? Of course
there are. This kind of news will affect the stock, but in a
more temporary way."
Gartner's Michael Gartenberg, author of the report, said the
study was "not meant to be a forum to release new and major
findings. This is stuff we've been saying for quite some time."
Also, analysts said they were more concerned about
statements made by Michael Dell during the conference call after
his company, the No. 1 direct seller of PCs, released its
fourth-quarter earnings report late Thursday.
Dell said the Linux operating system, considered an
alternative to Microsoft Windows, was gaining momentum, and that
there was no rush of corporate customers upgrading hardware
systems for Windows 2000.
"We don't see a massive immediate acceleration due to
Windows 2000," said Dell.
Kwatinetz said such an immediate rush to Windows 2000 was
not to be expected. He focused on Dell's positive remarks about
the alternative Linux operating system, saying these comments
could be more significant.
"He (Dell) gives the feeling that there are some other new
operating systems that are going to pose a challenge to
Microsoft," he said.
Warburg Dillion Read analyst Charles Wolf agreed that
positive comments about Linux could steal Microsoft's momentum,
especially one week before the new operating system becomes
"The Linux comments are obviously a negative," he said.
"A lot of the 'dot-com' small companies are jumping on it
because it's cheap and works. Let's not say it is the next
coming, but it is a negative to Microsoft in that it takes away
from its ability to take share in the small-business space."