Microsoft Stock Takes Sharp Drop

Microsoft Corp. stock dropped 3-7/8 points Monday after reports that an upgrade to its Windows 95 operating system for personal computers may not be on the market until next year.

Microsoft closed at $90-1/8 on Monday, down 3.72 percent, but not as low as the $87-1/2 the stock hit earlier in the day.

Wall Street’s response “made me somewhat unpopular in the first meeting of the day,” said Jonathan Roberts, director of product marketing at the Redmond-based company.

A test version of the upgrade, code-name Memphis, will be ready in July, but the date for a final release will depend on feedback and how long it takes to make changes in the software.

Last month, Microsoft began telling personal-computer makers, such as Compaq, Dell and Gateway, that the new software would not be ready in time for preloading into machines before the Christmas shopping season.

“Obviously, it would be desirable to be in the shopping season, but I don’t think it will have any significant effect on the sales of Windows or the hardware devices,” Roberts said. Still, “it’s nice to be on the shelves for Christmas.”

Microsoft’s fortunes aside, advances in operating systems can spur sales of personal computers.

Last year, for example, a lot of people were anticipating the Intel Pentium chips with new MMX technology. But they didn’t come out until January, and a lot of people held off buying personal computers until after last Christmas.

“A lot of elements can drive sales. Windows is certainly a big element. Most (PC) vendors would like to have it sooner or later, but it’s hard to predict precisely what kind of impact it will have on the market,” said Dwight Davis, editorial director of “Windows Watcher” newsletter in Redmond.

The Windows upgrade will include improvements that would provide a unified view for users, letting them see their files in the same format as World Wide Web pages, Roberts said.

The new version will include a browser upgrade, Internet Explorer 4, which is also available as a stand-alone. Microsoft hopes to have it available for the fall. It will be distributed for free.

An analyst’s statement that Microsoft had decided to give away the new version of Windows is erroneous, Roberts said.

“We have not made a decision on what the pricing will be,” he said.

Microsoft has missed delivery dates for major operating systems before. It recently pushed back a long-delayed update to its Windows NT system until early next year.

As recently as January, company treasurer Greg Maffei noted that the release date for the Windows 95 upgrade was uncertain.

“We haven’t come down hardcore on a shipping date. But it’s very easy to see that as a fiscal ‘98 product,” he said then.

If the new generation of Windows doesn’t come out until next year, “it gives an opening to some of (Microsoft’s) chief competitors to make up some ground while Microsoft dallies on the operating systems front,” Davis said.

Companies such as Netscape, Sun, IBM and Oracle could use the time to promote the use of a Java-based platform instead of Windows, he said.

“If Microsoft could have shipped the next generation by midyear this year, it would have generated a lot of attention and kept a lot of people in the Windows camp,” Davis said.

With a delay, a small percentage might decide to stray from the fold, he said.