• New York Times, Friday, April 28, 2006 10:31 AM

The New York Times thinks Microsoft, which released good first-quarter results yesterday, is ramping up spending in preparation for war with Google and Yahoo. Analysts, in particular, were surprised with the company's predictions of significantly higher expenses in the next fiscal year. Investors balked at this and the company's projections of flat profits, despite what will be the company's largest release of new products in over 5 years. Analysts were confused by the news; one, from Goldman Sachs, said,  Skip to next paragraph"There is something really big here that we haven't put our fingers on." Another: "It's pretty clear that Bill is running the company again and they are going to remake the business." But not everyone was impressed. A Pacific Crest Securities analyst said, "It looks like a mess, and the big issue is margins and expenses, the big issue is the bottom line. It makes it hard to get very excited about the company's near-term prospects."

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