The Department of Justice is expected to recommend Friday that Microsoft be broken in two: One company would sell operating systems, such as Windows; the other would sell everything else, including Microsoft's highly-profitable Office application software, its struggling Internet properties and sundry other businesses such as keyboards.

But half a Microsoft is still bigger than most other companies. The company's $21 billion-plus cash hoard would be split according to the revenue of each part, enough to make both new companies among the richest around. Each would have technology assets that it could use to be a monopoly player in its own right, likely necessitating years of government supervision of nearly every technology move either made.

The lines between an operating system, which runs other programs, and an application program - word processing, for example, or spreadsheets - is a blurry one; the Microsoft application company - using Office as a platform - might be tempted to give operating system-like functions to its application software; the operating-system company might do the reverse, adding applications features.

And many observers say a split-up Microsoft could also bring with it unintended consequences for consumers in the form of software that both costs more and doesn't work as well with other programs as current Microsoft offerings. "A break-up would be really bad news for consumers," says Joe Clabby, an analyst with the Aberdeen Group, a Boston consulting firm.

"Microsoft has been successful because they have integrated the applications with the operating systems. Now I as a consumer am going to have to do that myself. And each of the companies is going to have its own overhead - that is going to jack up my costs."

Certainly, the Microsoft part selling operating systems would face tougher competition from the VA Linux Systems Inc.'s free operating system. That's because the applications company would no longer resist selling a Linux version of Microsoft's Office. The lack of availability of Microsoft's popular application programs such as Office is one reason that Linux hasn't moved much beyond its current core group of technically oriented computer users.

"The main issue for the head of an applications company would be, "How do I maximize the use of Office?" says Chris Le Tocq, a Gartner Group analyst. "Right now, they think about using Office to guarantee the spread of Windows."

The mere availability of Office for operating systems besides Windows is no guarantee of success. Microsoft has made Office software - which bundles together word processors, spreadsheets, e-mail programs and many other applications - available for the Apple Macintosh for many years. What's more, Linux lags behind Windows in large part because it lacks an easy-to-use interface, installation system and development plan.

Since talk of a breakup resurfaced this week, Wall Street analysts have been struggling to understand what the two hypothetical, mini-Microsofts might look like. It's a difficult task. Right now, Microsoft gets about 40% of its revenue from Windows, the rest from Office and other products.

But there is nothing hard and fast about those numbers because the company can, in effect, use profit from one business to help subsidize another. Currently, Microsoft can charge less for its operating systems because it knows it will also be getting money from its customers from Office. A divided company might set entirely new pricing for the two sets of products.

And for all their strengths, each of the new companies would "have its own ball and chain," says Melissa Eisenstat, an analyst with CIBC World Markets in New York. For example, she says, the huge and profitable Office applications program is ow so dominant that potential for growth is limited. And, she says, the operating-system side has a delicate balancing act ahead of it as it tries to slowly move its users to newer, and more profitable, versions of Windows, like Windows 2000.

Besides Office, a new Microsoft applications and Internet company could contain some other promising products. Microsoft's consumer group also has big stakes in services such as Expedia Inc., now its own, publicly traded online-travel company, and Web car seller CarPoint, a Microsoft property that now has a 25% investment from Ford Motor Co.

The applications company could also move its technology to work directly on the Internet, a new, network-oriented approach to computing that some people believe threatens both sides of the Microsoft house.

While many people have begun to speculate about what a split Microsoft might look like, two groups weren't joining in on the speculation. One is Microsoft's potential competitors; one said Thursday that doing so would suggest to customers that it can't compete with Microsoft without government help.

The other is Microsoft itself. Steve Ballmer, its chief executive, declined in an interview Thursday to even speculate about how two separate companies would operate. "It's just way, way over the top," he said.

Ballmer added that Microsoft's best work can be done only if its operations are in a single form. Though many start-ups are making the software industry more competitive with new products and services, Ballmer said that "some innovations might only come from bigger companies."

-- The Wall Street Journal