UPDATE 1-Microsoft shares fall after warning on Vista

(Adds analyst comment, updates share price)

BOSTON, Feb 16 (Reuters) - Microsoft Corp. (MSFT.O) shares fell as much as 2.7 percent on Friday, their biggest drop in nine months, after Chief Executive Steve Ballmer said analysts' forecasts for fiscal 2008 revenue for Windows Vista were "overly aggressive."

Ballmer made the comment on Thursday, two weeks after the world's largest software maker released the upgrade to its ubiquitous Windows operating system and predicted that consumers would move to Vista faster than they did to past Windows upgrades.

"It's probably some people saying this is not good news, let's take our money out," said McAdams Wright Ragen analyst Sid Parakh.

The Windows franchise is the centerpiece of Microsoft's business; The company makes more than 75 cents in operating profit for every dollar of sales. The cash flow generated by Windows allows Microsoft to make investments in new business like digital music players and online services.

Investor optimism about Windows Vista has helped push the company's shares up 30 percent since last June, although the stock has dipped in recent weeks.

Microsoft shares were down 70 cents, or 2.4 percent, at $28.76 in heavy Nasdaq trade after falling to $28.65 earlier in the session.

The stock was the biggest decliner in the Dow Jones industrial average .DJI..