Market Overview

With Disappointing Microsoft Windows Sales, Investors Renew Concerns over Growth


With blockbuster earnings results from technology companies around the industry, including rivals Apple (NASDAQ: AAPL) and Google (NASDAQ: GOOG), investors in Microsoft (NASDAQ: MSFT) renewed their concern Thursday after the company posted lackluster Windows sales.

Sales of Windows fell for the second consecutive quarter, to $4.7 billion. Though the company posted net income of $5.87 billion, or $0.69 per share, shareholders immediately seized on wary near-term growth prospects for the PC industry.

Adding to market uncertainty is the announcement Wednesday from chipmaker Intel Corp (NASDAQ: INTC) that PC sales likely won't meet its forecasts.

"All eyes are on Windows and how they are ultimately going to extend this franchise in the future, as the PC business continues to lose share to the tablets," Josh Olson, a technology analyst at money manager Edward Jones told Reuters.

"Microsoft is really a show-me story in terms of its ability to extend its core flagship products to these new growth platforms."

The company's online services unit, which includes search engine Bing and MSN, saw its loss widened to $728 million from a loss of $688 million a year ago. Notably, the online unit has now lost more than $6 billion in the last three fiscal years.

It remains to be seen how Microsoft management will adjust to an uneven economic recovery. PC sales have curtailed in recent months, yet consumers flock to popular products like Apple's iPad or a new phone using Google's Android software. The ever-evolving demands of consumers has taken a visible toll on Microsoft's new services, as well as its core businesses.

Shares of Microsoft have largely fluctuated between $20 and $30 for the past 18 months. Stockholders certainly enjoy consistent returns, but a louder segment of investors want to see more than that: growth.

Posted-In: WindowsEarnings News


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