WALL STREET As Microsoft matures, its role in investors' portfolios changes

The software company is no longer an upstart.
NEW YORK (AP) -- Microsoft Corp.'s successes over the past three decades have made it the third-largest company in the stock market and its founder the richest man in the world. But with its peak growth years behind it, investors are wondering what's ahead for the computing powerhouse.
For years, investors have classified Microsoft as a growth stock, and certainly it has been a bellwether for the high-tech sector. But the upstart that helped lead the tech revolution has become more mature, and with its products dominating the software market, its stock price no longer loops upward as it did in the company's youth.
"It seems like their shareholder base is really turning over from a lot of the growth funds to a value base," said John Rudy, an analyst with Standard & amp; Poor's. "The big question is, what is the catalyst to get the shares going?"
Microsoft is among more than 170 companies in the Standard & amp; Poor's 500 reporting quarterly earnings in the coming week. It's expected to post profits Thursday of 29 cents a share and revenues of $8.66 billion, according to analysts surveyed by Thomson First Call.
Other results expected
Results are also expected from such bellwethers as Pfizer Inc., American International Group Inc., Altria Group Inc. and Coca-Cola Co. Though most companies have either matched or beaten Wall Street's expectations so far this earnings season, the market's reaction has been muted. The prospect of higher interest rates has been an unwelcome distraction for investors, who are struggling through a correction that started in February.
Investors searching for further evidence that the economy is improving will be listening closely to forecasts for the rest of the year, including Microsoft's. The company may not make any surprise announcements, but investors are looking to it to find ways to increase its profits since the next version of its Windows operating system isn't due until 2006.
Possible moves
With almost $53 billion in cash and short-term investments, Microsoft could go acquisition hunting, though its wrangling with regulators makes anything beyond a strategic niche purchase unlikely. It also could share more of its wealth with investors, either with a one-time special dividend or by raising its payout on an annual basis.
Now that it has dealt with a series of legal issues in the United States and abroad, the company may be willing to do just that, though probably not next week, Rudy said.
It recently settled patent and antitrust suits with Sun-Microsystems Inc., InterTrust Technologies and AT & amp;T Corp., and last year it put to rest claims by Time Warner Inc. involving Netscape Communications. And most of the uncertainty surrounding its European Union antitrust case was dispelled last month, when EU regulators ruled against it, ordering sanctions and a big fine. Microsoft is appealing the decision.
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