Microsoft, the $14.5 billion software giant, may see a decline in revenue growth next year, according to the company's chief financial officer, Mr Greg Maffei.

In a address to European journalists at the company's headquarters in Redmond, Washington, Mr Maffei said it would not be unrealistic for the company to experience growth next year in the "high teens to early twenties". This pessimistic outlook compares poorly with growth last year of 28 per cent. Prior to that Microsoft experienced annual revenue growth of between 30 and 50 per cent. Mr Maffei attributed the gloomy outlook to a number of factors. A slowdown in global PC shipment growth and an increasing trend towards PC replacement has seen consumers transferring old versions of Microsoft software on to new machines. The desktop applications market, which accounts for nearly half of Microsoft's business, is also experiencing slow growth.

The Asian markets crisis has also had an impact, particularly in Japan which accounts for 85 per cent of Microsoft's Asian business. Mr Maffei predicts this market - currently representing about 13 per cent of its global market - will shrink to 10 per cent by the end of this year.

The expected growth slowdown may have further implications as the company's stock price is hit. Microsoft adopts a policy of paying its 38,000 strong workforce relatively low amounts of current income, while topping it up with heretofore soaring stock options. Mr Maffei predicts if the traditionally meteoric rise of the stock - currently standing at about $109 - slows down existing employees may seek higher current incomes, creating further problems for Microsoft in attracting new employees.

He said the company had not put a replacement remuneration scheme in place yet.