Yesterday, he was a stampeding elephant; today, a limping mouse.

That, in effect, is the shrinking investment image that the world’s richest man – Microsoft founder and chairman Bill Gates (worth an estimated $50 billion) – is increasingly conveying to Wall Street.

Investors are signaling loud and clear that the 51-year-old whiz kid, whose 1979 software creation (2005 sales: $39.7 billion) used to dazzle Wall Street with superior growth and frequent earnings surprises, is no longer the stock market goliath he once was.

Microsoft’s poorly performing shares graphically illustrate this. Since its 2001 wrap-up at $66.25, the stock, based on yesterday’s close of $27.23, is down roughly 59%, while a number of key market averages are trading at multiyear highs. And in recent years, Microsoft has languished in the mid-$20s.

Richard Moroney knows the pain. For three years, the research chief of Dow Theory Forecasts, a monthly newsletter in Hammond, Ind., has doggedly stuck with the stock, repeatedly pitching it to DTF subscribers in the fervent hope the one-time high flier of the 1980s and 1990s would break out of its rut. Alas, no such luck.

Now, though, he’s almost ready to give Bill Gates the gate. “Enough is enough; it’s put-up or shut-up time for Microsoft,” Mr. Moroney says. “If they don’t deliver the goods, we’re going to say goodbye.”

What he wants to see from Mr. Gates – and he’s hardly alone – is a pickup in Microsoft’s profit margins and an acceleration of sales growth.

Given Microsoft’s large number of new products coming to market, he thinks such goals should be easily achievable. “If they can’t do it, we’d be very discouraged and discontinue our buy recommendation,” he says.

“Every quarter is crucial from here on in, starting with the March quarter,” Mr. Moroney adds. Consensus estimates call for profit growth of 14% this year and 16% next year, and anything outside a 13% to 17% growth range would be disappointing he says.

What’s wrong with Microsoft? Litigation risks loom high in Mr. Moroney’s mind, given numerous antitrust suits pending in federal and state courts and the company’s ongoing tussle with the European Commission. European antitrust regulators have threatened to fine Microsoft up to $2.4 million a day if they find it failed to satisfy provisions of a March 2004 ruling. Mr. Moroney says it’s difficult to predict how this battle will end, although Microsoft has just announced it’s willing to meet the European demands.

Declining profitability is also a big worry. In its December fiscal quarter, Microsoft’s operating income fell despite 9% revenue growth. This largely reflected higher marketing and production spending to boost the release of several new products. It recently kicked off a $500 million follow-up marketing campaign to revitalize interest in its wares.

Likewise, Microsoft recently unleashed a major restructuring of the unit responsible for its flagship Windows operating system, obviously indicating significant problems, which include product delays.

Another Microsoft dilemma, according to Mr. Moroney, is its market perception. Years of poor stock performance and public relations blunders, he says, have now made Microsoft a show-me stock.

Despite these worries, however, he nonetheless sees reasons for optimism. Chief among them:

* Healthy PC sales: Microsoft projects 12% to 14% growth in global personal computer shipments in its June fiscal 2006 year, which is good news for its Windows operating system and its Office Suite of business software.

* Diversified business mix: Microsoft has never enjoyed a more diversified revenue stream, with about 40% coming from video game systems and games, Internet services and software, and services for computers other than PCs.

* Financial strength: Microsoft seems willing to share its cash load with investors. In the December quarter alone, it paid out $957 million in dividends and repurchased more than $7.5 billion of its stock.

* New products: Microsoft recently launched new versions of its server software, Xbox gaming console, and software development tools. What’s more, by year-end it expects upgrades of Windows and Office and a new package of television software available for widespread distribution.

After weighing the pros and cons, Mr. Moroney concludes that Microsoft is a relatively low-risk stock with good value that has the potential to rise to $31 to $32.50 over the next 12 months, which would hardly be an inspirational performance. A couple more quarters of profit growth could prove the company has got its groove back, he says.

He may be right, but caution is clearly required. For five years, some of Wall Street’s biggest names have mistakenly pushed a Microsoft rebound story. Arnold Silver, a Los Angeles day trader who takes a dim view of the software biggie, given its slowing growth, legal woes, and more intense competition, likens Microsoft to “an aging model with warts who needs to show the world she can be a beauty once again.”

Harry Truman’s most memorable remark may best sum it all up: “I’m from Missouri, show me!”