If you are an Excel 2007 user, try this:

Type =77.1*850 in any cell and press Enter. Excel 2007 would return a value of 100,000 instead of 65,535.
Any combination of numbers that should calculate to 65535 will show 100000 in Excel 2007.

Excel Team says the issue is actually not in the calculation itself (the result of the calculation stored in Excel’s memory is correct), but only in the result that is shown in the sheet. 

Said another way, =850*77.1 will display an incorrect value, but if you then multiply the result by 2, you will get the correct answer (i.e. if A1 contains “=850*77.1”, and A2 contains “=A1*2”, A2 will return the correct answer of 131,070).

I am not sure if that's correct because when I type =B1+1 in the cell C1, I get 100001 and not 65536 as per the official explanation.

Anyway, David Gainer confirmed that this bug was introduced in the Excel 2007 version and a fix for the calculation issue would be available on Microsoft Download Center very soon. It's already under testing.