By Network World Staff
Network World, 12/25/00

Perennial powerhouse Microsoft kept swinging in 2000, despite getting hit with a few good punches.

The greatest blow came in June, when U.S. District Court Judge Thomas Penfield Jackson found Microsoft guilty of antitrust violations and ordered the company split in two. The appeals process, which will drag through the first half of 2001, could prove to be a power drain.

The stock market got in another shot, with Microsoft's stock price plummeting. At one point in October, the stock price was more than 50% below its yearly high of $119.

Another whammy came with the resignation of 14-year company veteran Paul Maritz, group vice president of the platforms strategy and developer group. He helped develop Windows and Office.

But Microsoft doesn't retract; it reloads.

Steve Ballmer, CEO since January, and Bill Gates, as chief software architect, spent the year hawking Windows 2000 and morphing Windows into a distributed computing infrastructure called .Net. Their challenge now is defining .Net clearly and delivering servers and development tools.

The two delivered big revenue for fiscal year 2000, which ended June 30. The tally was $23 billion, an increase of $3.2 billion over last year. However, that reflects a slight weakening in revenue growth -- the 1999 revenue figure came in at $4.5 billion more than the '98 number.

The good news is the stock slide should reverse as Win 2000 finds acceptance; as of early December, the stock was trading in the upper $50 range. Investment forecaster Zacks Investment Research predicts earnings growth of slightly more than 10% for 2001 and 12% for 2002.

Clearly, Microsoft is still a power broker. But just as clear is that the company will have to work harder in 2001 as its bread-and-butter PC market declines.

That means .Net will have to gain traction and success is needed in new technology areas such as wireless, with the Stinger phone; digital devices, with Pocket PC; and games, with Xbox.

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