Microsoft Earnings Put Spotlight On PC Sales - InformationWeek

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Software // Operating Systems
01:18 PM

Microsoft Earnings Put Spotlight On PC Sales

Windows 8 can't come soon enough for Microsoft and its partners, as consumers hold off computer purchases.

Microsoft is slated to report quarterly earnings Thursday after markets close, and investors will be looking for signs of how the company's Windows business is faring amid competition from tablets and other devices that don't run Redmond's venerable OS.

Also expected to weigh on Microsoft's sales is the impending launch of Windows 8, which may have consumers holding off on new PC purchases until after it arrives on Oct. 26.

Analysts surveyed by Thomson Reuters expect Microsoft's fiscal first-quarter earnings to fall 5.5%, to $16.42 billion. That's compared to $17.37 billion last year. Earnings per share are expected to decline from 68 cents to 56 cents.

In Microsoft's most recently completed quarter, Windows sales were off 12.6%, to $4.15 billion, compared to $4.74 billion the previous year.

[ See 8 Must-Haves For Windows Phone 8. ]

Microsoft is hoping Windows 8 will eventually boost those numbers. The operating system comes in two main versions, one that runs on traditional PCs as well as tablets that are powered by x86 or x64 processors from Intel or AMD. The other, Windows RT, runs on chips designed around ARM Holdings' system-on-a-chip architecture. Windows 8 Pro and Enterprise will run all existing Windows applications. Windows RT only runs new apps, which must be downloaded from Microsoft's Windows Store.

Intel is also hoping that Windows 8 provides a lift. The chipmaker this week reported that sales from its PC processor business were off 8% year over year, to $8.6 billion.

"Our third-quarter results reflected a continuing tough economic environment," said Paul Otellini, Intel president and CEO, in statement. "The world of computing is in the midst of a period of breakthrough innovation and creativity. As we look to the fourth quarter, we're pleased with the continued progress in Ultrabooks and phones and excited about the range of Intel-based tablets coming to market."

Analysts at research firm Trefis said that the run up to Windows 8 is impacting demand. "In light of the uncertain macro environment and the upcoming Windows 8 launch, Intel's customers are maintaining a lean inventory which in turn led to lower demand for its microprocessors," the analysts said in a note.

The firm said that tablets from Apple and Android device makers are taking a bite out of the Wintel ecosystem. "In light of the uncertain macro environment and the upcoming Windows 8 launch, Intel's customers are maintaining a lean inventory which in turn led to lower demand for its microprocessors."

Microsoft shares were off 0.54%, to $29.43, in afternoon trading Thursday. Shares of Intel were down 0.23%, to $21.74.

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