Microsoft Says Fourth-Quarter PC Shipments May Have Fallen Short

January 11, 2012, 11:47 PM EST By Dina Bass

Jan. 11 (Bloomberg) -- Microsoft Corp., the world’s largest software maker, said industrywide sales of personal computers will probably be lower than analysts projected in the fourth quarter because supply was hurt by flooding in Thailand.

Analysts have estimated that total PC shipments fell about 1 percent in the period, Tami Reller, chief financial officer of Microsoft’s Windows unit, said at an investment conference yesterday. The actual number is probably lower, she said. Bill Koefoed, Microsoft’s general manager of investor relations, echoed those remarks at a separate event.

“As the numbers come out, you’ll likely see that number decline further as the impact has been felt faster than people had anticipated,” Koefoed said at a JPMorgan Chase & Co. conference. Reller told the audience at a Nomura Holdings Inc. event that there could potentially be more downward adjustments. Both conferences were held in Las Vegas, where the Consumer Electronics Show is under way.

Last year’s flooding in Thailand, which knocked disk-drive factories off line, took a toll on a PC market that was already suffering from competition with smartphones and Apple Inc.’s iPad. Sales in Microsoft’s Windows unit, which makes the operating system software that runs most PCs, have missed estimates in three of the past four quarters. The comments probably mean they will fall short again, said Brendan Barnicle, an analyst at Pacific Crest Securities in Portland, Oregon.

‘Under Siege’

“The Windows business is under siege,” said Barnicle, who had estimated that PC shipments dropped 1 percent in the quarter. He rates Microsoft shares “sector perform.” “Windows is their most profitable business. If that’s not stable for whatever reason -- Thailand, Apple -- it just becomes difficult for the stock to gain momentum.”

Shares of Redmond, Washington-based Microsoft slipped 1.8 percent in extended trading after the comments were reported. The stock had closed at $27.84 at the close in New York.

Analysts on average predict the company’s total sales in the fiscal second quarter, which ended in December, will rise 5.3 percent to $21 billion, according to data compiled by Bloomberg.

Microsoft is working to release a new operating system, Windows 8, that’s designed to work on iPad-like tablets, helping it compete with Apple. A public test version is set for February, and Reller gave a preview last night during Chief Executive Officer Steve Ballmer’s keynote address at the Consumer Electronics Show.

The executives declined to comment yesterday on when the final version will go on sale. Analysts expect it later this year.

PC Makers, Intel

PC shipments rose 3.6 percent in the third quarter, according to market researcher IDC, less than the 4.5 percent growth the firm had predicted. Hewlett-Packard Co. was the world’s biggest PC seller in the quarter, according to IDC, followed by Lenovo Group Ltd. and Dell Inc.

Intel Corp., the world’s biggest computer-chip maker, cut its fourth-quarter revenue forecast by $1 billion last month, citing the disk-drive shortages.

The floodwaters engulfed much of the industrial heartland north of Bangkok, sidelining production of disk drives and components. The affected area produces about a quarter of the world’s drives, IDC estimated in November.

Drive manufacturers are still working to recover, though some have bounced back faster than they had expected. Western Digital Corp., one of the harder-hit companies, has resumed production and raised its quarterly revenue forecast.

Still, these types of shortages take time to go away, Microsoft’s Reller said.

“It tends to take a few quarters to work its way through the system,” she said. “It would be naive to believe otherwise.”

--Editors: Jillian Ward, Nick Turner

To contact the reporter on this story: Dina Bass in Seattle at dbass2@bloomberg.net;

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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Emerging Technologies America Has Fallen Behind On

There are many new technologies from all over the world, including America. But the majority of these emerging technologies are hot technology that America doesn't have. Japan has seemed to corner the market on many of the up and coming technologies such as ones that are connected to computers, consumer electronics and a host of other things that America needs to catch up on.

According to the JD Power Asian Pacific 2007 Japan Automotive Study, eight of the 14 new technologies that draw predominantly high levels of consumer interests were either related to fuel economy, safety or the environment.

It's not the Japan is the only one who is working in the emerging technologies; it's just that America is falling behind in their work within development of new technologies. Funding plays a major role in the fact that America is behind in the technology department when it comes to certain places emerging technology is needed, such as the medical community where monies need to be raised in order to sustain the research. Japan works with many different companies that fund their research in emerging technologies because these companies know how important it is to be on the cutting edge of the science and consumer technology front. Some American companies are starting to get on board when it comes to "going green" and saving the environment, because they know this is a growing concern of many Americans today.

The study also found that technologies such as extra airbags in the automobiles the likes of which are knee airbags and anti-whiplash seats have garnered much interest among consumers worldwide. These implements are in place now in Japan however this is a life-saving technology America doesn't have. They are working on it however they just don't have it as yet.

Japan's emerging technologies in the IT - Information Technology and computers in general have surpassed America for a long time. Many of the gadgets and computer components that the American companies use today we purchased and received from overseas, simply because we do not have the technology to build these components ourselves. Japan, like many of the other Asian nations, have what it takes to build the emerging technologies to put together smarter, faster computers and technological gadgets such as smarter cell phones, iPods that you can watch full-feature movies on, digital watches and calculators that do a whole host of other things besides keep time and calculate numbers.

The software industry is another place where Japan's emerging technologies surpasses Americas. Many of these software programs come in the form of games but others have practical applications in the business world. Japan's edge in the game world far surpasses Americas but we seem content purchasing Japan's gaming technologies. However, America is working hard in the consumer technology industry to come up with better, faster and more efficient ways of doing things. The medical community is one place where America has outdone Japan; medical technology in America now surpasses most countries in developing technology related to medicine and health care.

Both countries are far from finding cures for fatal diseases but they are getting close to developing technology that will help us bring cures to these once devastating diseases.

Chaashni Mahmoud writes technology, product and services reviews for The Oxford Chronicle. She has been a systems engineer and computer scientist for 15 years and continues to work in the industry today. You can read more about technology from Chaashni at [http://www.oxfordchronicle.com] and http://www.flying-toasters.blogspot.com