In an investor note this morning, the FBR analysts, who downgraded the enterprise software sector Sept. 3, updated their outlook:

"While we did not anticipate this current credit crisis, it is exacerbating our initial negative view for our sector's outlook. While a resolution to the credit crisis may stabilize the market and even provide a temporary lift, we believe the focus for our group will then shift from the current credit crisis to an IT budget crisis. We believe the hangover will manifest itself in an extended period of weak IT spending. As a result, today we are lowering our estimates and price targets for many companies in our sector."

The analysts lowered their price target for Microsoft from $40 to $35 with an "outperform" rating. They lowered their revenue estimate for the current fiscal year from $67.6 billion to $65.5 billion, which would be annual growth of 8 percent rather than 12 percent.

For Microsoft, Adobe, Oracle, Symantec and others, the strengthening U.S. dollar could be an additional headwind. A weaker dollar makes products cheaper to foreign buyers so companies earn more, in dollars, on overseas sales. Currency exchange rates benefited Microsoft's revenue to the tune of $410 million in the second quarter of fiscal 2008, for example.

"Following eight quarters of sequential depreciation of the U.S. dollar, the dollar appreciated by 11% in the September quarter and by another 4% in the first two weeks of October. [These companies] have benefited from a weak dollar over the past two years and will now face headwinds. Should the dollar maintain its current levels, the dollar impact on revenue growth should be neutral in the December quarter and then become a headwind through the first three quarters of 2009."

More Microsoft-Yahoo speculation this morning. This time, the Wall Street Journal's Heard on The Street column does the 20/20 hindsight math on how much Microsoft would have overpaid had Yahoo accepted its best offer.

"For a sense of the enormous bullet Mr. Ballmer dodged, consider: If Yahoo had accepted Microsoft's $33-a-share offer, the deal could still be waiting for regulatory approval. Microsoft would be sitting there with its high-priced offer still open while the stock-market crash was drastically reducing asset values.

"On Friday, Yahoo was trading just north of $12, giving it a market capitalization of roughly $17 billion -- less than the value of cash and short-term investments on Microsoft's balance sheet. If Microsoft wanted to jump back into the fray with a new bid, it could still offer a 50% premium and pay $20 billion less than its original deal."

The story calls it a "a good bet" that Microsoft will bid for Yahoo again, but says there's no hurry as Yahoo's position looks to be getting worse not better.

Coming up later this morning: Scott Guthrie, corporate vice president of Microsoft's .NET Developer Division, is making a Silverlight-related announcement this morning at 9 a.m. He's expected to announce the completion of Silverlight 2, the next version of Microsoft's platform for online video and rich Internet application development. The competitor of Adobe's Flash was released in beta in March.