Slow PC Sales Mean More Bad News for Microsoft

Results out of HP (HPQ) and Ingram Micro (IM) yesterday indicate that PC and server demand remains weak, with IBM reporting PC sales declining 19% on a unit volume decline of 4%. Ingram indicated that they saw weakness across PC and server shipments in January and February with notable weakness among enterprise buyers.

This is continued bad news for Microsoft (MSFT) whose business model is facing a bevy of threats from changing consumption patters and a slumping economy.

Comments

[Josh B Thom...:]

why not say bad new for tech sector? what's this focus on Microsoft?

Feb 20 09:14 AM

[jack dee:]

Josh , that is an easy one to answer.

MSFT has millions of share holders so putting MSFT or Microsoft in the story makes it get a ton of links and clicks.

cheap , I know but its Alpha, the non investing , investing site.

Feb 20 02:23 PM

[rajeev bajpai:]

PC sales from HP is at the same level where it was in 2Q/07 in terms of revnue. and ESS (servers and storage) at the 1Q07 level or may be earlier. The PC volumes are expected to decline by 10%+ (some estimates are even higher) in 2009. The only segment growing at a fast clip is netbooks and there also android or Linux may make further inroads. So MS has to reduce the prices and face reality. so volumes down /ASP down ..could mean more problems ofcourse. Would be interesting to see the MS response in this era of slowing demand.

Feb 21 01:11 AM

[danf:]

"why not say bad new for tech sector? what's this focus on Microsoft?"

MS does not sell very much directly. Other companies sell computers which sells the windows OS. Few people choose to buy MS products. We buy them because we have to. MS has no place to grow. They have failed in every venture outside OS and Office and now with Vista they have a failure in their core business.

If dell, hp and other PC mfgs cannot grow sales in computers, MS cannot grow. Indeed they may see negative growth which will uncover the drag all their failed ventures have imposed on the company.

MS is committed to big stock buybacks to support Bill Gates stock sales. MS Mgmt has shown that at any time they could run off the rails with a huge, cash consuming acquisition. Shareholders dodged the yahoo bullet, but how long can they stay lucky.

MS is the ultimate value trap run by a management team boxed in by their entitlement mind set

Feb 21 08:12 PM

[Josh B Thom...:]

The immediate previous comments make me think: "well...at least Seeking Alpha is not as clueless as danf"
The success of Server Software, database software, and developer softwware, and the ultra-positive news regarding Windows 7 was ignored, or not even known by the poster.
Since it usually takes MSFT 3 times to get it right, and Windows 7 is only the second try for Vista, the 3rd try on Vista will truly be the competitor killer OS.
MSFT knew that Vista would take a hit for backward compatibility and their payback is MSFT can now move on into the Windows 7 future. I'm sure AAPL is thinking we're in trouble once MSFT's 3rd try on Vista comes out considering the positive feedback on Windows 7.

Feb 22 01:47 AM