Microsoft profits to rise despite PC growth concerns

Microsoft is expected to have a nine per cent increase in profits due to strong Windows and Office sales.

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

The world's largest software maker joins Google, Apple, and IBM in reporting surprisingly good results as technology spending holds up relatively well in an uncertain economy.

However chipmaker Intel has indicated that PC growth will not be as strong as expected, casting doubt on the future of Microsoft's strong performance.

"The mature market consumer segment is still soft," Intel chief executive Paul Otellini told analysts this week, after the company cut its 2011 PC growth projection to a range of eight per cent to ten per cent from earlier estimates in the low double digits.

PC sales grew only 2.3 per cent 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 per cent of which come pre-loaded with Windows - directly affects Microsoft's top and bottom line, and there are already signs that sales of its popular Windows 7 operating system are leveling 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.

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.

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

Its growth has been moderate since its dominance in the 1990s, with sales growing 12-fold between 1991 and 2000, but only growing two and a half times between 2001 and 2010.

"It's a large, cash flow-oriented company, but explosive growth has probably passed it by the wayside," said Michael Yoshikami, chief executive of fund manager YCMNET Advisors.

Further reading:

See Reuters' interactive graphic comparing major tech firms

Recent articles

Info Message

Our sites use cookies to support some functionality, and to collect anonymous user data.

Learn more about IET cookies and how to control them