Microsoft slump fuels PC demand fears

Source: Exec

Date :25/04/2008 04:25:53

Software giant Microsoft Corp. has reported a 4.6 percent share decline in early U.S. trading after a slump in sales, raising concerns about the short-term future of the PC market.

The world’s leading software developer suffered a 24 percent drop in sales during the last quarter, upsetting a trend of positive results for companies in the technology industry.

Already this month, both Intel Corp. and Google Inc. showed a growth in profits that many believed was a sign of strength in the industry against the backdrop of a suffering global economy.

The decline in Microsoft shares equates to a $1.45 drop to $30.35 before U.S. exchanges opened, after having climbed 13 percent since news of Intel’s first quarter growth on April 15.

Downturn

Profits for the company fell eleven percent to $4.39 billion, with revenues stagnating at the $14.5 billion mark. Microsoft has said that projected profits for this quarter will be between 45 cents and 48 cents on sales figures between $15.5 million and $15.8 million, compared to an analyst estimate of 48 cents and $15.5 million.

Analysts had suggested that Windows sales would exceed predictions due to a 15 percent increase in PC shipments, but a shortfall occurred due to Microsoft cutting prices and making attempts to discourage piracy; the piracy rate increased irrespective, most notably in China.

This downturn for Microsoft makes the proposed Yahoo acquisition even more vital for the company as it attempts to mount a serious challenge in online technology against market leader Google.

April 25, 2008