Weak PC sales, Apple to ding Microsoft's Windows sales, say analysts
Microsoft's Windows franchise is about to face some rough sledding due to three factors: Sluggish PC sales, Apple's popularity and widespread coverage of Windows 8 that may keep consumers on the sidelines.
Gartner and IDC reported their third quarter PC unit shipment figures on Wednesday. The unit growth can be summed up in one word: Anemic. Specifically, Gartner pegged PC growth at 3.2 percent, which was below its previous 5.1 percent forecast.
The figures have analysts scurrying to handicap the blow to Microsoft's Windows franchise.
Also see: HP retains top PC spot, Lenovo surges
Stifel Nicolaus analyst Tim Klassel said about PC sales:
We largely expected these results given the broad media coverage of the Windows 8 launch in September causing some consumers to begin delaying purchases as they wait for the new version, an effect we have modeled to accelerate through the end of the fiscal year. This combined with Apple's ongoing strength in tablets and Macs we think will continue to underperformance in the Windows division. For the quarter, we are reducing our underlying PC unit growth rate from 6.2% to 3.1%, which lowers our revenue estimates for the Windows division from $4.96bn to $4.84bn (up 1.2% y/y).
Morgan Stanley analyst Adam Holt said that PC growth was better than his estimates and added:
Developed consumer continues to be weak as expected, while commentary downticked on US and EMEA corporate PC growth as IT budgets feel the strain from macro uncertainty, suggesting better than expected units will be largely offset by a mix shift away from corporate/dev. markets. While Microsoft should hit our Windows estimate of $4.75 billion, consensus again appears to not have adjusted for PC food chain data points and is likely high at $4.9 billion.
Fortunately for Microsoft, analysts expect the software giant's other units to more than pick up any slack in the Windows division. Servers and tools, Xbox and Office are expected to shine in the September quarter.
Microsoft reports its fiscal first quarter earnings next week. Wall Street is expecting earnings of 68 cents a share on revenue of $17.26 billion.
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