The PC Betrays Microsoft

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Earlier this evening, Microsoft (Nasdaq: MSFT  ) reported worse-than-expected results,  as its Windows division revenue plummeted from last year's fiscal first quarter. The stock fell more than 1.5% after hours.

Overall revenue fell 8%, to $16.008 billion, while earnings declined 22%, to $0.53. Analysts were expecting $16.42 billion and $0.56, respectively, according to data supplied by Yahoo! Finance. Windows 8 can't come soon enough, apparently.

Revenue and operating income in the Windows division fell 33.4% and 49.7%, respectively, reflecting both a global slowdown in PC sales and a lack of new Windows 8 machines. Microsoft officially unveils Windows 8 next week.

"The launch of Windows 8 is the beginning of a new era at Microsoft," CEO Steve Ballmer said in a press release. "Investments we've made over a number of years are now coming together to create a future of exceptional devices and services, with tremendous opportunity for our customers, developers, and partners."

Count Intel (Nasdaq: INTC  ) among the needy. Last month, the chipmaker cut guidance on expected weakness in PC demand. Meanwhile, rival Advanced Micro Devices (NYSE: AMD  ) hit a new low this week -- and that's in spite of supplying chips to Mr. Softy's new Surface tablets, which already look like a hot seller in the making.

Windows 8 will be a catalyst regardless. Pre-order sales of the new OS and an upgraded edition of Office amounted to another $1.36 billion in revenue, which Microsoft will recognize in the current quarter.


Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team and the Motley Fool Supernova Odyssey I mission. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's web home, portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader.

The Motley Fool owns shares of Intel and Microsoft. Motley Fool newsletter services have recommended buying shares of Intel. Motley Fool newsletter services have recommended creating a synthetic covered call position in Microsoft. Motley Fool newsletter services have recommended writing puts on Intel. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

Read/Post Comments (3) | Recommend This Article (0)

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Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On October 19, 2012, at 12:51 AM, matthewluke wrote:

    I assume you meant to say that ARM (or Nvidia using ARM tech) is supplying chips to the RT version of the Microsoft Surface. As far as I'm aware, there is no AMD tech in the Surface (please correct me if I am wrong though).

  • Report this Comment On October 19, 2012, at 3:15 AM, khaledmrd wrote:

    PC will grow as global population growing

    it was just a pause before the PC+ era which means Windows 8 Intel based Tablets & Ultrabooks which are PC

    while Windows RT Tablet, i don't consider a PC as it is not compatible with old Windows software

  • Report this Comment On October 19, 2012, at 8:19 AM, TMFMileHigh wrote:


    >>I assume you meant to say that ARM (or Nvidia using ARM tech) is supplying chips to the RT version of the Microsoft Surface.

    I meant AMD, but I also misread the news. The new Z-60 *is* for Windows tablets but apparently not the Surface. More:

    Thanks for the note and Foolish best,



    Tim Beyers

    TMFMileHigh, Motley Fool Rule Breakers Analyst, Supernova Odyssey I Portfolio Contributor


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