Microsoft Corp. (MSFT) said industrywide sales of personal computers will probably be lower than analysts had projected in the fourth quarter because supply was hurt by flooding in Thailand.
Analysts have estimated that total PC shipments fell about 1 percent in the quarter, Tami Reller, chief financial officer of Microsoft’s Windows unit, said an investment conference. The actual number is probably lower, she said. Bill Koefoed, Microsoft’s general manager of investor relations, echoed those remarks at a separate event.
“As the numbers come out, you’ll likely see that number decline further as the impact has been felt faster than people had anticipated,” Koefoed said at a JPMorgan Chase & Co. conference. Reller told the audience at a Nomura Holdings Inc. event that there could potentially be more downward adjustments. Both conferences were held in Las Vegas, where the Consumer Electronics Show is under way.
Last year’s flooding in Thailand, which knocked disk-drive factories off line, took a toll on a PC market that was already suffering from competition with smartphones and Apple Inc. (AAPL)’s iPad. Microsoft’s Windows sales have missed estimates in three of the past four quarters. The comments today probably mean they will fall short again, said Brendan Barnicle, an analyst at Pacific Crest Securities.
“The Windows business is under siege,” said Barnicle, who had estimated that PC shipments dropped 1 percent in the quarter. He rates Microsoft shares “sector perform.” “Windows is their most profitable business. If that’s not stable for whatever reason -- Thailand, Apple -- it just becomes difficult for the stock to gain momentum.”
Shares of Microsoft, the world’s largest software maker, slipped 1.8 percent in extended trading after the comments were reported. The stock had closed at $27.84 earlier today.
Microsoft is working to release a new operating system, Windows 8, that’s designed to work on iPad-like tablets, helping it compete with Apple. A public test version is set for February, and Reller gave a preview last night during Chief Executive Officer Steve Ballmer’s keynote address at the Consumer Electronics Show.
The executives today declined to comment on when the final version will go on sale. Analysts expect it later this year.
Intel Corp., the world’s biggest computer-chip maker, cut its fourth-quarter revenue forecast by $1 billion last month, citing the disk-drive shortages.
While drive manufactures are still working to recover, some have bounced back faster than they had expected. Western Digital Corp. (WDC), one of the harder-hit companies, has resumed production and raised its quarterly revenue forecast.
Still, these types of shortages take time to go away, Microsoft’s Reller said.
“It tends to take a few quarters to work its way through the system,” she said. “It would be naive to believe otherwise.”
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