Microsoft to Report Lower Profits as iPad Gains in Popularity

By Ed Silverstein January 27, 2011

Microsoft Corp., was expected report a drop in earnings on Thursday, because the number of personal computers it is selling is lower than expected and Apple's iPad has grown in popularity, according to media reports.

Microsoft is expected to report second-quarter profit of 68 cents per share, Reuters reported today. That is lower than the 74 cents per share that Microsoft reported in the prior year.

Microsoft’s sales were expected to increase slightly from $19 billion a year ago to $19.15 billion. The numbers were increased by sales of the Kinect gaming system, which sold eight million units over the winter holiday shopping season, above Microsoft's expected volume of 5 million units.

PC sales increased 3.1 percent in the last three months of 2010, Reuters reported, citing data from Gartner.

Still, Microsoft remains the world's largest software maker. It is found in over 90 percent of the world's computers.

Investors are growing increasing concerned whether Microsoft can outperform rivals in the mobile and tablet markets, according to Reuters.

Reuters also noted that shares of Microsoft stock dropped 2.4 percent in the last 12 months, whereas the tech-heavy Nasdaq saw a 24 percent increase.

Microsoft’s Windows 7 remains popular but sales numbers are not as high as a year ago, according to Reuters.

Steve Ballmer is in his 12th year as CEO of Microsoft.

Last week, Apple – now a Microsoft rival – reported a record $6 billion quarterly profit due in part to sales of iPhones and iPads over the winter holiday shopping season.

In other Microsoft company news, TechZone360 reported that the company filed a complaint to prevent TiVo from importing television set-top boxes. The complaint Microsoft sent to the U.S. International Trade Commission accuses TiVo of infringing on four Microsoft patents.

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Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Tammy Wolf

TechZone360 Contributor

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