Richard Doherty, an independent consumer-electronics analyst who visited Japanese stores in October, traced his initials in the dust on a box containing Microsoft Corp.s Xbox video-game machine.
When he returned 45 days later, the box and his initials were still there. "It was sad," Seaford, New York-based Doherty said.
Chief Executive Steve Ballmer and Chairman Bill Gates have unveiled tablet computers, watches, key chains and refrigerator magnets that remotely access data in the last four months.
Investors are concerned those products also may sit unsold on store shelves.
The new products may never boost sales the way Windows and Office programs did, investors and analysts said. Microsoft should be pickier, and use some of its more than US$40 billion in cash and securities to pay a dividend after the stock fell 22 percent last year, investors said.
"I don't see how they can possibly use their cash to increase their growth rate," said Mark Herskovitz, a fund manager at Dreyfus Corp, which manages US$181 billion and owns 13.7 million Microsoft shares. "It's extremely difficult to start new businesses where you aren't the dominant player and sell enough to make a significant contribution."
Microsoft reported average annual revenue gains of 38 percent in the 1990s. In the year ended June 30, sales rose 12 percent. Microsoft will report today that revenue increased 11 percent in the fiscal second quarter ended Dec. 31, according to the average Thomson First Call analyst forecast.
Net income rose to US$0.46 a share on sales of US$8.59 billion, the First Call average estimates. Net income in the year-earlier quarter was US$0.41, including US$0.08 a share in legal costs, on sales of US$7.74 billion.
The PC market is now "more of a challenge than an opportunity" as the company tries to boost sales amid slowing demand from corporations and consumers for computers, Ballmer said in July.
Ballmer has been making sales calls on government and company officials in countries including Australia, while Gates displayed the Tablet PC in New York in November and products such as the watch in Las Vegas this month. Ballmer received US$753,310 in salary and bonus in the fiscal year ended June 30 and owns 4.4 percent of the Redmond, Washington-based company, or 235.5 million shares, valued at US$13.25 billion based on yesterday's closing price.
Microsoft shares fell US$0.70 to US$56.27 at 4pm New York time on the NASDAQ Stock Market. Last year's drop was the second in three years, after they rose about 100-fold in the 1990s.
Microsoft probably will be unable to find new businesses with profit margins that approach the more than 75 percent on Windows and Office, investors said. Sales of Windows and Office products for PCs generated 67 percent of Microsoft's revenue in the 12 months ended June 30.
Ballmer told shareholders who asked for a dividend at the annual meeting in November that a dividend will "continue to be a matter of active discussion" by Microsoft's board.
RSS