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Microsoft's Earnings Semi-Debacle

Microsoft shocked me with huge revenues and earnings decline. I mean, have you ever heard of Microsoft sales dropping, never mind collapsing 8%? Earnings were down more fiercely, a gut-wrenching 22 percent.

While enduring endless heaps of pundit criticism, Microsoft set sales record after sales record, like clockwork. It was rarely enough to quell the maddening pundit crowd. Now those years of negative prophecies have finally been fulfilled.

Microsoft's problem is the PC's problems. Sales of PCs are down, so OEM Windows sales and sales of new Office copies are concomitantly down. Sales of new PCs were down 8.6% in the third quarter alone.

On the plus side, Microsoft is on the cusp of shipping a huge array of ambitious products, Windows 8, Windows Phone 8, and 2013 versions of Exchange, SharePoint and Lync. Once rolling, these products will start to moo as the cash cows they were built to be.

So what is going on with PCs? There could be a sales lull as folks wait to see Win 8. There is more use of smartphones and tablets for computing and communicating. Virtualization means thin clients can swap in for PCs or PCs can run off servers where the apps are upgraded on the server (and an old PC can always appear new).

And let's face it, after more than 30 years of PC availability, there are so many machines that we sometimes have to pay to get rid of them.

Microsoft execs can take solace in one fact: Google also got dumped on. Its stock got hammered after the company pre-released earnings that were less than Wall Street expected. Twenty billion in market value disappeared before trading was stopped.

What is your theory about PC sales and how many machines do you own? Explain yourself at 

Posted by Doug Barney on 10/19/2012 at 1:19 PM

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Reader Comments:

Sat, Oct 20, 2012 Rich Arizona

The local Best Buys are all low on stock of PCs. They say everyone is clearing out what they have in preparation for the Win 8 release. Also seen some clearance sells from vendors.

Fri, Oct 19, 2012 Ed Colorado

In contrast to the other comments here, I am NOT anxiously awaiting Win 8 -- used it; don't want it. I am deliberately updating some business users to Win 7 quickly so I don't have to support them on Win 8. I doubt that I will ever again buy a "PC" for my own use, not counting that I will continue to update my Macs :-).

Fri, Oct 19, 2012 Greg Arizona

Everyone in our company is waiting for W8 including me for a new personal computer and I have told everyone in our community of 4,000 homes the same thing, it's crazy to purchase a new computer any time this year before W8 is available as it is a complete game changer like W95 was and who wants to be stuck with an old OS on old hardware that might not ever run W8 correctly.

Fri, Oct 19, 2012 Dan Iowa

Everyone I know who thought about new PC hardware over the last 3 months is holding off to see what new hardware appears with Windows 8; me included. New OS is touch screen optimized remember? I'm guessing you got this one right. I also predict another few months of reduced sales while vendors roll out new hardware. Many of us are waiting for the Intel based Surface release before we decide what to purchase.

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