Shares of software giant Microsoft (NASDAQ: MSFT) fell on Friday after Chief Executive Steve Ballmer, said analysts’ revenue predictions for Windows Vista were a little overly optimistic.

Microsoft spoke to analysts on Thursday regarding its strategy for fiscal 2008. Steve Ballmer was cautious on expected demand for the company’s new flagship operating system, Windows Vista, saying people are a little bit over optimistic, or more optimistic than we are about Windows revenue.

Shares of Microsoft dropped 2.27 percent, or $0.66 to 28.80 in mid-day trading on the Nasdaq Stock Market.

Analysts said on Friday that while the comments were not encouraging, the conservative tone was not unexpected.

His views seemed to imply EPS [earnings per share] about inline with Street estimates, wrote Rick Sherlund of Goldman Sachs. We are more optimistic on PC unit growth/Vista demand for 2008 than implied by management guidance, which we view as conservative and setting the bar low for 2008.

Sherlund maintained a Buy rating for the stock, saying valuation of Microsoft shares are among the least expensive in the software sector.

J.P. Morgan analyst Adam Hold also maintained a ‘Buy,’ expecting 9 percent revenue growth in the fiscal year of 2008, for the division that produces Vista.