Microsoft Branches Out Beyond Personal Computers to Maintain Success.

Byline: Kristi Heim

Aug. 4--SEATTLE--Microsoft is still king of personal-computer software, which propelled it to legendary success since its founding 28 years ago. But to maintain the growth that made its stock attractive for years, Microsoft increasingly needs to look beyond the desktop PC.

The world's largest software company has piled up a $53.5 billion cash hoard thanks to profits from its two hugely successful franchises: the Windows operating system and the Office suite of productivity software. But those two product lines are now saturating the market.

And the company has had uneven success in other areas. Microsoft's 10-year-old server-software business is now kicking in $2 billion of operating profit a year. The other arenas Microsoft is betting on -- business solutions, the Microsoft Network and home entertainment -- are each still losing hundreds of millions of dollars a year.

Microsoft's sales hit $32.2 billion in the fiscal year that ended June 30 -- up 13 percent from a year earlier but a far cry from annual growth rates of 30 percent to 40 percent in the late 1990s.

Microsoft's passage from a sizzling growth company to a …