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Microsoft hints at lower fourth quarter earnings

updated 03:55 pm EST, Wed January 11, 2012

Blames drive shortages from Thailand floods

In two separate conferences in Las Vegas yesterday, Microsoft executives predicted that PC shipments industrywide for the fourth quarter of 2011 will be lower than expected. Tami Reller, chief financial officer and chief marketing officer of Microsoft's Windows and Windows Live Division, said that estimates of overall PC shipments were about one percent lower than expected. Reller made the remarks at a Nomura Holdings Inc. event yesterday. Bill Koefoed, Microsoft's general manager of investor relations, made similar remarks at a JPMorgan Chase & Co. conference. Koefoed said the actual number may be even lower.

The executives pointed to last year's flooding in the industrial region north of Bangkok, Thailand for the slump. The area produces approximately one quarter of the world's hard drives. Last month Intel Corp. also cited the flooding and resultant disk drive shortages as a factor in its decision to cut fourth quarter revenue estimates by $1 billion. Drive manufacturers have still not recovered completely from the catastrophe.

The comments from Reller and Koefoed may foreshadow another quarterly profit shortfall for Microsoft. Fewer PCs sold means fewer Windows licenses. Microsoft's Windows unit is the company's most profitable, but has missed earnings estimates for the past three quarters. Microsoft shares, $27.84 at the closing bell in New York, fell 1.8 percent in extended trading after the comments were reported.

Reller also gave a preview of the company's latest operating system during Chief Executive Officer Steve Ballmer's keynote address at the Consumer Electronics Show. Windows 8 is designed with an eye to the tablet market, which is dominated by Apple's iPad. A public test of Windows 8 is scheduled for February, but no ship date has been announced. [via Business Week]



By Electronista Staff
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