Wall Street: Vista Coupons Could Cost Microsoft $600M

UBS AG's Heather Bellini has reduced her sales estimate from $13.4 billion to $12.6 billion for Microsoft's second quarter, which ends in December, Bloomberg News reported. Microsoft will probably be forced to defer as much as $600 million in Windows client sales if it goes through with the anticipated coupon offer, Bellini told Bloomberg.

That program, which inside sources have dubbed "Express Upgrade," will let buyers of PCs running Windows XP Home to upgrade in early 2007 to Vista Home Basic for $49, or to Vista Home Premium for $79. Customers who buy PCs equipped with Windows XP Professional, Windows XP Pro Tablet PC Edition, or Windows XP Pro x64 Edition between Oct. 26, 2006 and March 15, 2007 will be entitled to a free Vista upgrade under the program.

Another analyst, Rick Sherlund of Goldman Sachs, pegged the Vista revenue deferment at between $500 million and $1 billion for the next two quarters. He also said that if Microsoft expands the free/discount coupon offer to Office 2007, the next version of Microsoft's business suite that is to launch simultaneously with Vista, another $200 million in sales would have to be postponed. Microsoft has not publicly committed to either a Vista or Office 2007 coupon program.

The company will report on its December forecast when it presents first quarter earnings next Thursday, Oct. 26.

In early trading Thursday, Microsoft shares were down $0.34, a 1.2 percent drop, to $28.18.