PC doubts lead as Microsoft profit looks set to rise

Microsoft is expected to post a 9% increase in fiscal fourth-quarter profit on Thursday, helped by solid sales of its Windows and Office mainstays, but investors may be distracted by evidence of flickering computer sales, which are key to its success.

The world’s largest software maker is set to follow Google, Apple, and IBM in reporting surprisingly good results as technology spending holds up relatively well in an uncertain economy.

But the latest signs from chipmaker Intel on Wednesday — that PC growth will not be as strong as it expected this year — cast doubt on how long Microsoft’s strong performance can continue.

“The mature market consumer segment is still soft,” Intel chief executive Paul Otellini told analysts on a conference call on Wednesday, after the company cut its 2011 PC growth projection to a range of 8% to 10% from earlier estimates in the low double digits.

Even that could be optimistic. PC sales grew only 2.3% last quarter, according to research firm Gartner, as cash-strapped consumers held off buying or opted for an iPad instead.

The number of PCs sold — 90% of which come pre-loaded with Windows — directly affects Microsoft’s top and bottom line.

There are already signs that sales of its popular Windows 7 operating system are levelling off. Microsoft said last week it has now sold more than 400-million Windows 7 licenses since launch in October 2009, up from 350-million three months ago. That suggests 50-million Windows sales in the quarter — about the number it sold the quarter before that.

Windows 7 has already become old news for investors eyeing Windows 8 — the provisional name for the next tablet-friendly operating system expected late next year.

Long-term moderation
Wall Street analysts expect Microsoft to post a profit of 58 cents per share for the quarter, up from 51 cents a year ago, while sales are expected to rise 7% to $17.23-billion, according to Thomson Reuters I/B/E/S.

Microsoft’s revenue and profit have recently slipped behind archrival Apple, which had more than $28-billion of sales last quarter, helped by its explosively popular iPhone and iPad.

Microsoft has seen its growth moderate since it rose to dominance in the 1990s. Its sales grew 12-fold between 1991 and 2000, whereas they grew by only two and a half times between 2001 and 2010.

“There’s just not enough growth there to make people interested,” said Michael Yoshikami, chief executive of fund manager YCMNET Advisors, earlier this week. “It’s the Johnson & Johnson of technology. A large, cash flow-oriented company, but explosive growth has probably passed it by the wayside.”

Microsoft shares have outpaced the tech-heavy Nasdaq over the past month, but still are perched around $27 — a level they have circled since 1998 — adjusted for splits.

Advertisting

Hlophe complaint is an eerie echo

But the new complaint against the Western Cape judge president is also unprecedented

Mabuza contract grows by R10m

Eskom’s negotiators in a R100-million maintenance contract came back with a proposal to push up the costs

‘There were no marks on his neck’, Neil Aggett inquest...

The trade unionist’s partner at the time he was detained at John Vorster Square says she now believes his death was not a suicide

Study unpacks the ‘hidden racism’ at Stellenbosch

Students say they feel unseen and unheard at the university because of their skin colour
Advertising

Press Releases

Boosting safety for cargo and drivers

The use of a telematics system for fleet vehicles has proved to be an important tool in helping to drive down costs and improve efficiency, says MiX Telematics Africa.

Silencing the guns and firearms amnesty

Silencing the guns and firearms amnesty

Gender-based violence is an affront to our humanity

Gender-based violence is an affront to our humanity

UK-Africa investment summit 2020: Think Africa Invest SA

UK-Africa investment summit 2020: Think Africa Invest SA

MTN unveils TikTok bundles

Customised MTN TikTok data bundles are available to all prepaid customers on *136*2#.

Marketers need to reinvent themselves

Marketing is an exciting discipline, offering the perfect fit for individuals who are equally interested in business, human dynamics and strategic thinking. But the...

Upskill yourself to land your dream job in 2020

If you received admission to an IIE Higher Certificate qualification, once you have graduated, you can articulate to an IIE Diploma and then IIE Bachelor's degree at IIE Rosebank College.

South Africans unsure of what to expect in 2020

Almost half (49%) of South Africans, 15 years and older, agree or strongly agree that they view 2020 with optimism.