Microsoft's cable and telecoms spending spree of a couple of years ago has finally reared up and bitten the company. It said yesterday that it expected to report a $2.6 billion loss on its investment portfolio in its fourth quarter, quantities of the stuff it spent money on having apparently gone through the floor.

Microsoft says that the losses relate primarily to the cable and telecoms sectors, and that current investments would lose $3.9 billion by the end of the quarter. Gains elsewere go some way towards counteracting this, hence the $2.6 billion bottom line.

But one can perhaps sense the ghost of former CFO Greg Maffei moaning and clanking his chains through the portfolio. Greg it was who, around two years ago, circled the globe pressing money (frequently in $5 billion-sized packages) into the hands of cable and telecoms operators. It is not entirely clear what benefits have accrued to Microsoft subsequent to this spending spree; from an investment point of view, however, the likes of AT&T, NTL and Telewest currently seem not to have been particularly smart moves.

Fortunately current CFO John Connors was able to signal that Microsoft revenues look like being ahead of expectations, $6.5-$6.6 billion, rather than $6.3-$6.5 billion. Depending on how you look at it, this might not be what you'd call a dizzying improvement, but the shares went up last night anyway. The full earnings report in due on 19th July. ®