April 19, 2012 / 8:49 PM / 7 years ago

Instant View: Microsoft hitches ride on resilient PC market

(Reuters) - Microsoft Corp’s quarterly results surpassed Wall Street’s targets as computer sales held up better than expected, lifting its shares more than 2 percent.


“Pretty good quarter. It highlights the strength of the core business — all the enterprise-focused businesses, like Office, server and tools and Windows.

“When Gartner and IDC announced their numbers, there was a general sense that there might be a slight pickup in PC sales. Clearly there’s still a business PC refresh that’s ongoing. Plus, a recovering consumer PC.

“PCs are fairly affordable and if you go over to emerging markets, a tablets isn’t the first device people buy.

“There was weakness in entertainment and devices. If that were to have come in inline, it would have been a pretty nice beat. In general, we did know that the hardware and software markets for gaming were somewhat slow.

“There’s a line in there about op ex for FY 13, which is above what I was looking for, so maybe more insight into that” on the analysts’ conference call.


“It looks good. Particularly good was the Windows business, which grew about 4 percent, more than PC industry growth. In the last few quarters, Windows has been growing less than PCs overall.

“It’s not clear yet what drove this change, but it could be that the negative impact on PCs from tablets has peaked. The Office business was particularly strong too, which is encouraging.”


“I am liking what I’m seeing with respect to the business-oriented software. Server and tools looked especially strong. And I’ll damn the online services with the faint praise that they only lost half as much as they did last year. At least the loss seems to be coming down.

“There has to be something going on with entertainment and devices in this quarter, because it looks like they turned a gain into a loss. They should address that on the call. I don’t think we expected entertainment and devices to be strong this quarter, but the loss needs to be explained.

“Next year at this time we should be talking about Windows 8 mobile and how it’s contributing or not to the company. But we really need Windows 8 to come out on all devices, to see if it’s going to have that synergy or not.”


“The Windows beat was a positive surprise. Looking at about 4 percent growth, versus expectations for about a 4 percent decline.

“We also had solid business and server performance as well. The big three if you will, in terms of the revenue drivers, were all a little bit better than expected, with Windows a lot better than expected.

“Perhaps the demise of the PC is not as great as everyone is anticipating here. It looks like the PC is showing a little resiliency. We’ll just have to wait and see how this plays out. This is one datapoint.

“Obviously smartphones and tablets are certainly fast growing and important markets. So it’s not as if we can ignore that. But this does kind of give us pause and makes us reconsider this PC market.”

Reporting by Alistair Barr and Alexei Oreskovic in San Francisco

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