Falling PC Sales Cut Microsoft's Profit Margin

By Ashok Bindra January 17, 2012

With the rise of tablets, sales of desktop and notebook PCs have been declining. And software giant Microsoft Corp. is obviously feeling the heat of falling sales. As the company tackles slow PC sales, which is impacting the Windows business, it is also struggling to make a dent into the faster-growing mobile phone and tablet markets.

According to Reuters, the value of Microsoft shares are not expected to change much on Thursday when the software giant presents its financial results.

However, the report quoted Barclays Capital analyst Raimo Lenschow as saying, “It is clear that investors will continue to need to be patient. There could be positive short-term momentum ... but we first need to see proper evidence of mobile/tablet success rather than just signs of hope.”

Meanwhile, last week at the Consumer Electronics Show in Las Vegas, Microsoft gave an indication of tough times ahead. Speaking to analysts on Tuesday, Microsoft’s marketing executive for the Windows unit Tami Reller highlighted the most recent decline in PC sales and warned that the floods in Thailand are slowing the shipments of disk-drives, which s further adding to the problem, wrote Reuters reporter Bill Rigby.

Focusing on the impact of shortages, the report quoted Reller, as saying, “I just think it's going to take a couple of quarters to work itself out.”

“It would be naive to believe otherwise. The level in each of the quarters, I think that's hard to exactly predict,” noted Reller.

Microsoft’s cautious outlook for PC sales was supported by Gartner’s report, which shows a 1.4 percent decline in global PC sales for the fourth quarter, wrote Rigby. According to Gartner’s study, Rigby wrote, the effect of disk-drive shortages will be felt in the first half of this year.

In reality, “the market watcher thinks that continuous low consumer PC demand is bad news for Microsoft, whose financial success is still closely bound to computer sales, despite its forays into gaming, servers, Internet search and phones,” wrote Rigby.

Want to learn more about the latest in communications and technology? Then be sure to attend ITEXPO East 2012, taking place Jan. 31-Feb. 3 2012, in Miami, FL. ITEXPO offers an educational program to help corporate decision makers select the right IP-based voice, video, fax and unified communications solutions to improve their operations. It's also where service providers learn how to profitably roll out the services their subscribers are clamoring for – and where resellers can learn about new growth opportunities. For more information on registering for ITEXPO registration, click here.

Stay in touch with everything happening at ITEXPO. Follow us on Twitter.


Ashok Bindra is a veteran writer and editor with more than 25 years of editorial experience covering RF/wireless technologies, semiconductors and power electronics. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

SHARE THIS ARTICLE
Related Articles

ITEXPO's IBM Keynoter: AI is Here Today

By: Paula Bernier    2/20/2018

Many folks think the artificial intelligence is something we'll see in the future. That's true. AI will be employed in a broader variety of more sophi…

Read More

The Blockchain Event Draws a Crowd

By: Paula Bernier    2/20/2018

The Blockchain Event in Fort Lauderdale draws a crowd, offers some answers, and raises lots of interesting questions. Why have some cryptocurrencies g…

Read More

Hughes: WAN Optimization Expertise, Homegrown Solution Differentiate SD-WAN

By: Paula Bernier    2/16/2018

The SD-WAN marketplace is a crowded one. But Hughes Network Systems says it brings unique expertise and proven technology to the table. And that, Jeff…

Read More

Juniper Security Expert: Behavior Analytics Helps Address Threat Complexity

By: Paula Bernier    2/16/2018

Organizations are changing their cybersecurity strategies, says Juniper Networks Cybersecurity Strategist Nick Bilogorskiy, who presented the closing …

Read More

Welbitz Wins ITEXPO's Idea SHOWCASE

By: Paula Bernier    2/16/2018

It was a sweep. Both the audience and the judges at ITEXPO's IDEA Showcase Thursday picked Welbitz as the winner. The company went up against fellow s…

Read More