Microsoft Executives Warn 4Q PC Shipments May Be Worse Than Feared
January 11 2012 - 9:36AM
Dow Jones News
Microsoft executives warned that industry analysts' expectations
for a 1% decline in fourth-quarter personal-computer shipments may
be too optimistic, as the aftermath of flooding in Thailand
disrupts the supply of a key computer component.
The remarks suggest PC makers continue to struggle with
production issues stemming from Thailand's worst flooding in
decades, which had caused the shutdown of a large chunk of the
world's hard-disk drive manufacturing operations. Meanwhile, the
rise in tablets is weighing on demand for PCs and economic concerns
are mounting, in part because of Europe's debt problems.
Tami Reller, the chief financial officer and head of marketing
for Microsoft's Windows business, said Tuesday that the PC shipment
forecasts from industry research firms Gartner and IDC could be too
large.
Microsoft Investor Relations General Manager Bill Koefoed echoed
that sentiment, saying of industry analysts' estimates for a 1%
decline in volume, "you will likely see that number decline
further."
Both executives blamed disruptions related to the Thailand
flooding for the worse-than-expected volume, while Reller also
referred to "macroeconomic reality."
"The impact had been felt faster than I think people had
anticipated," Koefoed said. "I think some of the supply chain
vendors have talked about how they are kind of recovering faster
than they had expected. But certainly, it has had an impact on the
PC market."
The executives were speaking at analyst forums during the
consumer electronics show in Las Vegas. Their comments came as
Gartner and IDC are due to report fourth-quarter PC shipment data
Wednesday afternoon.
Microsoft shares declined 1.5% to $27.41 in premarket trading
Wednesday. Meanwhile, shares of bellwether chip supplier Intel
Corp. (INTC), dipped 4 cents to $25.45.
Last month, Intel warned its fourth-quarter revenue will fall $1
billion short of its prior estimates due to hard-disk drive
shortages hurting its core PC market. Chip makers Texas Instruments
Inc. (TXN) and Altera Corp. (ALTR) have also recently cut financial
forecasts, citing weaker demand amid economic worries.
About 40% of the hard-disk drive industry's total output
originates in Thailand. Heavy flooding there had caused companies
such as hard drive maker Western Digital Corp. (WDC) and component
supplier Hutchinson Technology Inc. (HTCH) to suspend operations
there.
--By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;
matthew.jarzemsky@dowjones.com
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