Q3 Microsoft sales expected to underperform

[Student26]

Microsoft’s Windows franchise is about to face some rough sledding due to three factors: Sluggish PC sales, Apple’s popularity and widespread coverage of Windows 8 that may keep consumers on the sidelines.

Gartner and IDC reported their third quarter PC unit shipment figures on Wednesday. The unit growth can be summed up in one word: Anemic. Specifically, Gartner pegged PC growth at 3.2 percent, which was below its previous 5.1 percent forecast.

The figures have analysts scurrying to handicap the blow to Microsoft’s Windows franchise.

Also see: HP retains top PC spot, Lenovo surges

Stifel Nicolaus analyst Tim Klassel said about PC sales:

We largely expected these results given the broad media coverage of the Windows 8 launch in September causing some consumers to begin delaying purchases as they wait for the new version, an effect we have modeled to accelerate through the end of the fiscal year. This combined with Apple’s ongoing strength in tablets and Macs we think will continue to underperformance in the Windows division. For the quarter, we are reducing our underlying PC unit growth rate from 6.2% to 3.1%, which lowers our revenue estimates for the Windows division from $4.96bn to $4.84bn (up 1.2% y/y).

Morgan Stanley analyst Adam Holt said that PC growth was better than his estimates and added:

Developed consumer continues to be weak as expected, while commentary downticked on US and EMEA corporate PC growth as IT budgets feel the strain from macro uncertainty, suggesting better than expected units will be largely offset by a mix shift away from corporate/dev. markets. While Microsoft should hit our Windows estimate of $4.75 billion, consensus again appears to not have adjusted for PC food chain data points and is likely high at $4.9 billion.

Fortunately for Microsoft, analysts expect the software giant’s other units to more than pick up any slack in the Windows division. Servers and tools, Xbox and Office are expected to shine in the September quarter.

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Just keeping those who wish more informed on the continuing battle between Microsoft and Apple for the computing market (not just PCs)

[JayCub]

i couldn't blame anyone not purchasing a new pc if a new O/S is around the corner unless they are entitled to a free upgrade, but it's a sign of the times these days that there will be a slowdown on sales... lets hope MS makes the pricing of the new O/S reasonable...

thank you Student for sharing the article always appreciated, i can't see myself losing sleep over the fall in MS or Apple profits...

[Bearcat]

A week quarter for sales may send the share prices of Microsoft down to a level where I purchase more shares. A cash generating machine like MS isn't a bad stock to own at the right price.

[Student26]

A week quarter for sales may send the share prices of Microsoft down to a level where I purchase more shares. A cash generating machine like MS isn't a bad stock to own at the right price.

Well, at least you can always trust Microsoft to act like a big business . . . for better or worse.

[Bearcat]

Well, at least you can always trust Microsoft to act like a big business . . . for better or worse.

Well, whether you like them, or you don't like them, MS is a world dominator stock and since they started paying a dividend, which has gone up each year, they are a good long term investment.