The Bottom Line With the Justice Department s process out of the limelight for now, investors have refocused their attention on the company's business fundamentals, most notably on Microsoft's long-term prospects, the success of Windows 2000, and the company's Internet initiatives. We believe, however, that Microsoft s Windows 2000 operating system will be included in the lion's share of personal computers that will be sold in the U.S. in 2001 and beyond, not to mention millions more around the world. The Company has a pipeline of intriguing products that are expected to come to market this year and next, continues to flex its muscle in the desktop software market, and is still a force to be reckoned within the technology industry. Whatever happens on the downside related to Microsoft s legal problems, it will likely be months if not years, before the final chapter is written. In the meantime, we believe shares of MSFT have been discounted to reflect its legal battles and a moderate reduction in profit expectations for its current fiscal year.
Management believes the best use of retained earnings is to fund internal growth.
As a result, we do not anticipate the company paying any cash dividends on common stock in the foreseeable future. Microsoft does continue however, to be a buyer of its own stock, repurchasing 25.5 million shares during the September quarter. Licensing of Microsoft Windows 2000 Professional, Windows 2000 Server, Microsoft SQL Server, and the other .NET Enterprise Servers drove revenue growth. Revenue in Europe, the Middle East and Africa was flat versus the year-ago period. Desktop Applications includes revenue from Microsoft Office, Microsoft Project, Visio, client access licenses for Windows NT Server and Windows 2000 Server, Exchange, and BackOffice.