Microsoft Posts Big Second Quarter Profit

Don't start passing the plate for a Bill Gates defense fund just yet. The world's richest man is yet richer than anyone suspected. This week when Microsoft posted its profits for the fiscal quarter ending Dec. 31, its earnings had climbed 75 percent over the same period last year. A recent estimate of Gates's personal fortune puts it at $73 billion. The incredible rise -- Microsoft earned $1.98 billion -- was attributed to strong personal computer sales that triggered equally swift sales of the operating systems Windows NT and Windows 98.

As usual, Microsoft officials downplayed the windfall, saying that such results are unlikely to be duplicated in the near future due to an unstable foreign economy and concern about the yet unresolved "millennium bug." "They always warn of darker clouds on the horizon. It's both good p.r. and a realistic assessment of how fast this industry changes," says TIME's San Francisco bureau chief Michael Krantz. "You always want to outperform people's expectations. If you're a dominant company you want people to set the bar lower so you can always do more." This low-key response may also be part of an effort to convince the public -- and more importantly the Justice Department -- that supplying the software for 90 percent of the world's personal computers doesn't constitute a monopoly. If courts believe otherwise and Microsoft is found guilty of unfairly dominating the market for Internet browsers, the company faces a potential threat of being carved up. But even that threat doesn't appear to worry investors: By midday, the stock was up more than 10 points.