Some Wall Streeters are sounding early warning bells regarding a possible consumer PC slowdown. Yesterday, those rumors affected Intel and AMD share prices. On August 11, Microsoft also got dinged.
What's Microsoft's response? During a question-and-answer session at Oppenheimer's Annual Technology, Media & Telecommunications Conference in Boston on August 10, General Manager of Investor Relations Bill Koefoed downplayed slowdown reports. From the transcript of his remarks:
"You know, whether or not the market's up or down one month or another, I don't know, there tends to be, since I've had this job, there tends to be a lot of chatter. There's a lot of chatter back in kind of April, May about PC markets for the second quarter. I don't know that I would take two guys that go visit some ODM (original design manufacturer) in Taiwan as a reference on what the market looks like. I would gather a lot of information and then decide what you think that it looks like."
Koefoed reminded Oppenheimer conference attendees that Microsoft has sold 175 million Windows 7 licenses and repeated that business upgrades to Windows 7 are starting to happen now. He said demand in emerging markets is strong. Koefoed reiterated Microsoft's earlier guidance that "our Windows division would roughly move in line with the PC market."
Koefoed also seemed to infer there could be news about Microsoft's dividend coming in the next month or so. There's been growing speculation that Microsoft will raise its dividend to offset its stagnant stock price. In response to a conference attendee's question on Microsoft's dividend intentions, Koefoed said:
"Our board makes both capital as well as dividend policy decisions at their September board meeting. The dividend is something -- you can look at since we established it back earlier in the -- I don't know, decade -- we've grown it basically in line with operating income. In absence of saying anything more, I think you could expect that as a reasonable policy going forward."
Robert Youngjohns, Microsoft Senior Vice President and President, North America Sales and Marketing, also was asked about the possibile effects of a PC slowdown on the company. Youngjohns was speaking at the Pacific Crest Leadership Forum in Vail, Colo., on August 10. Youngjohns also downplayed the worries and noted that Microsoft has enterprise cash cows it can lean on. From a transcript of his remarks:
"I can't really comment on what we're seeing from these numbers. I mean, they're relatively new out there and we have our own assessment that we do and we talk about on a quarterly basis, in terms of our views of the market. I mean clearly our business is connected to the number of PCs that get sold. But, I think at the same time we have significant ability to sell other stuff related to the PC infrastructure. A substantial part of our business in North America is selling infrastructure software like Windows Server 2008, like SQL Server, like System Center, the stuff that runs the enterprise not just the PC, and that's a business that I think continues to be attractive to us."