A large number of antitrust class action lawsuits have been initiated against Microsoft.  These cases allege that Microsoft has competed unfairly and unlawfully monopolized alleged markets for operating systems and certain software applications and seek to recover alleged overcharges that the complaints contend Microsoft charged for these products.  Although Microsoft believes the claims are without merit and is vigorously defending the cases, the Company cannot predict with certainty the outcome of these lawsuits.



Future Growth Rate

The revenue growth rate in 2001 may not approach the level attained in prior years.  As discussed previously, certain operating expenses are expected to increase in 2001.  Because of the fixed nature of a significant portion of operating expenses, coupled with the possibility of slower revenue growth, operating margins in 2001 may decrease from those in 2000.