October 12, 1998

Microsoft Corp chairman Bill Gates, in long memo to staff, spells out main opportunities and threats he sees for software giant in next five years; holds Microsoft's is in its strongest position ever in computer industry; sees personal computer remaining main business and technology platform from which Microsoft stretches into main-frame systems and hand-held consumer-electronics devices; says Internet will continue to bind these products into Microsoftian whole, if company continues to ward off threats posed by IBM, Netscape Communications, Oracle and Sun Microsystems; memo, apparently aimed at showing Gates focuses on business in face of antitrust suit, also implicitly indicates Gates is withdrawing from operational management of Microsoft to become company's chief technologist; photo (M)

VICTORY SALUTE -- David Wells acknowledging Bronx cheers from Cleveland fans after he was removed in the eighth inning of a 5-3 victory by New York. The Yankees will advance to the World Series if they win tomorrow or Wednesday at Yankee Stadium. THAT'S ONE -- Atlanta broke out of its hitting slump in an 8-3 victory over the San Diego Padres, capped by Andres Galarraga's grand slam. It was the first victory in the National League Championship Series for the heavily favored Braves, who trail, 3-1. Articles, SportsMonday

Global financial crisis and plunging stock market are unnerving nation's more affluent families, making them more cautious in their spending; optimism has fallen significantly in households with incomes above $50,000 that were optimistic about financial situation before summer's sharp selloff in stock market, compared with families with lower incomes and little exposure to stock market that have shown no change in level of optimism; charts (M)

News analysis of effects of White House sex scandal on US domestic and foreign policy; with Pres Clinton distracted and his moral authority questioned, there is much room for US allies, Congress and even some major corporations to ignore, deflect or defy him; defiance by Yugoslav Pres Slobodan Milosevic over Serbia, refusal of Republican-controlled Congress to fulfill US obligations to International Monetary Fund and UN, and Clinton's failure to persuade major oil companies to build oil pipeline from Caspian Sea through Turkey, declared American strategic priority, discussed (M)

An Uneasy Meeting in China The test of wills between China and Taiwan will enter a new phase on Wednesday with the first high-level contact in five years, but the two sides have not publicly agreed on what they will discuss. Page A6. The Welcome Is in the Mail The Welcome Wagon is dismissing most of its representatives and replacing their visits to homes with direct-mail marketing. The reason: people are not at home as often as they once were. Page A15.