Microsoft Founder, Bill Gates
Loomis Sayles's Ursillo Interview on Microsoft Windows sales slumped last quarter as the iPad crimped demand for consumer laptops, marking the first time in 20 years that the software maker reported a smaller quarterly profit than Revenue in Microsoft’s Windows division fell 4.4 percent to $4.45 billion, the Redmond, Washington-based company said in a statement.
That missed the $4.6 billion average prediction of analysts surveyed by Bloomberg. Net income was $5.23 billion, eclipsed by the $5.99 billion reported by Apple last quarter.
Consumer PC shipments dropped 8 percent in the quarter, Microsoft Chief Financial Officer Peter Klein said. Netbooks -- the cheap laptops that became popular during the recession -- plunged 40 percent, partially because of defections to tablet computers, he said. The decline overshadowed a better-than- anticipated performance from Microsoft’s Office unit and increased PC demand from corporations.
“You have to live underneath a rock not to know that the iPad has taken share from the netbook,” said Pat Becker Jr., principal of Portland, Oregon-based Becker Capital Management Inc., which holds Microsoft shares as part of its $2.5 billion in assets. “It’s a problem on the consumer side, and that’s a market where Microsoft continues to give up territory to Apple.”
Microsoft fell 56 cents, or 2.1 percent, to $26.15 in Nasdaq Stock Market composite trading. The shares declined 4.3 percent this year before Friday.
Net income rose to 61 cents a share, from $4.01 billion, or 45 cents, Microsoft said . Excluding a 5-cent per-share tax benefit, earnings matched the 56-cent average of estimates compiled by Bloomberg.
The results underscore the ascendance of Apple, which surpassed Microsoft as the world’s most valuable technology company last May. The last time Apple’s profit was bigger than Microsoft’s was 1991.
While PC shipments to corporate customers rose 9 percent, tablet competition accounted for some of the sluggishness in consumer sales, Klein said in an interview.
“It’s fair to say tablet is some of that,” he said.
Total PC sales declined 2 percent last quarter, Microsoft said. That the Windows business performed even worse adds to the concern over Microsoft’s performance, said Brendan Barnicle, an analyst at Pacific Crest Securities in Portland.