The gifted 23-year-old playmaker, a target for several top European clubs, has been injured since August last year with a date for his comeback yet to be set.
The nagging back injury has also raised concerns over his fitness ahead of the World Cup starting in June.
"On whether he will compete in the World Cup, I am not the one to give out reliable forecasts," Watzke told Reuters in an interview.
"We will not speculate about when he will come back. We are convinced he will be healthy but we cannot measure this in terms of weeks or months."
Dortmund are eager to extend the deal with Guendogan, who has yet to commit himself publicly, as they seek to retain a core team of exciting young players including Marco Reus and Mats Hummels with an eye on the future.
"As for the contract, it will not be a long, dragged-out affair. I think it is not going to be more than a matter of weeks," Watzke said.
Dortmund, who face Real Madrid in the Champions League quarter-finals next week, have had a constant stream of injuries throughout the season, dropping some 25 points behind already- crowned champions Bayern Munich with seven games left.
Both teams are also still in the German Cup semi-finals.
"We have to look at it in relation with the unbelievable injury bad luck we have had this season and we can say that so far we have done very well," said Watzke, who has been credited with turning the 1997 Champions League winners around since coming in after their near bankruptcy less than a decade ago.
"We are battling for second place in the Bundesliga which is the maximum we could get out of it under the circumstances and then we have the two Cup competitions," he said.
"To be among the top eight European teams in Europe for a second successive year is also a bit of a legacy for us."
Dortmund were surprise Champions League runners-up last season after eliminating Real Madrid en route to the final, where they lost 2-1 to Bayern.
Real, however, were better than last season when Dortmund won 4-1 at home before losing 2-0 in Madrid in the last four tie, according to Watzke.
"If we had a full squad to chose from then it would not be as hugely difficult as it is now but the pressure is still on Real," the 54-year-old added.
"Real are a bit better this season than last and we have six or seven players from those matches who are not going to be with us. So Real are the favourites but we also know very well that we have a chance if we can get two good days against them."
Among those missing will be injured defender Marcel Schmelzer and suspended striker Robert Lewandowski, who is out of next Wednesday's first leg in Madrid.
Whatever the result, Dortmund had exceeded their own expectations after making the quarter-finals and could expect another solid financial 2013-14 season, Watzke said.
"We are growing, we are getting stronger financially," he added. "We are the undisputed number two in Germany and will remain that in the coming years."
Watzke said financial results for 2013-14 would reflect that.
"We could be a bit above what we had estimated at around €250 million (£206m) (in turnover)," he said of the Bundesliga's only listed club.
Dortmund recorded a turnover of a little more than €300 million (£248m) last fiscal year with about €50 million (£41m) generated by transfers, especially that of Mario Goetze to Bayern.
"Last year (2012-13) we had around €300 million (£248m) with the transfers and minus the transfers we expect to be around the €250 million (£206m) if not a bit above that for 2013-14."
Among those transfers necessary for next season to remain competitive is a replacement for Lewandowski, who is also joining Bayern.
Dortmund have seen one key player leave every season with Shinji Kagawa, Nuri Sahin, who has since returned, and Goetze the previous departures in recent years.
German media have reported Hertha Berlin forward Adrian Ramos could be close to a deal but Watzke said Dortmund were in the market for more than just Lewandowski's replacement.
"We will not be commenting on specific names," he said. "But we do have not just one player but several players in our sights we are eager to sign."
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