Microsoft is telegraphing bad news

“Yesterday, at an analyst meeting at CES in Las Vegas, Microsoft warned that fourth-quarter PC sales would come in worse than expected due to supply-chain disruptions stemming from the Thailand floods,” Michael Comeau writes for Minyanville.

“The only problem is this. We’ve known about the Thailand floods’ impact on the PC industry for months,” Comeau writes. “Every company in the PC supply chain from Hewlett-Packard to Dell to Seagate has talked about it on their respective earnings calls.”

Comeau writes, “No doubt, Thailand had its impact on PC production levels, but it’s also a convenient distraction from deeper, secular issues, namely Microsoft’s lack of meaningful exposure to the mobile-device boom being dominated by the likes of Apple, Google, Samsung, and Amazon… Now I realize that I’m once again putting on my Captain Obvious hat, but it looks like Microsoft is trying to soften the blow of a really, really lousy quarter for the Windows business by blaming Thailand. As in, HDD shortage or not, Microsoft was going to have one stinky quarter.”

Read more in the full article here.

MacDailyNews Take: The worm has turned and no amount of flooding can hide it.

[Thanks to MacDailyNews Reader “The Other Steve” for the heads up.]

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34 Comments

      1. You are falling into the trap of assuming that Amazon will recover the subsidy they are offering up in order to sell Kindles. That may be true, but it’s hardly a guarantee. It’s far safer to sell Kindles at cost or a small profit than to expect to make up a subsidy on every single Kindle sold. This could end up biting them in the rear in a big way.

        1. With a Kindle though, you CAN count on sales because when you buy a Kindle, you will definitely buy books. What else are you going to do with it? (Kindle Fire is different, I guess.) It’s not like an iPhone or iPod touch where it comes with lots of useful built in things where you might not buy very many additional apps. I’m sure they’re making a profit.

  1. What could possibly be in those negatives Ballmer is secreting in his safe-deposit box? It must be incredibly damning for him to last this long after halving the value of MS’s market cap!

  2. Typical of Microsoft. The telegraph is out of date, didn’t they know?

    Aye, the flood. A likely story. But I imagine a bit of truth into the story, by way of metaphor, which is usually more like the truth than what the toffers say it is.

    They are being consumed alive, bit by bit, by the Flood. Lookin’ inside that Bungie game that got their Xbox off the ground, HALO. Come back to bite them in the ass. Metaphorically.

  3. This shows how dependent Microsoft is on OEM Windows licensing. Its weakness in mobile makes Microsoft vulnerable, but even in “desktop and laptop” computers, the Mac marketshare is surging.

    Whereas Microsoft just earns a relatively small licensing fee per Windows PC sale, Apple profits from the whole machine. Each percent of Mac marketshare is probably worth 10 percent of Windows marketshare, in terms of profit generated.

    1. Agreed. It seems like the crowd is missing the point. All the Window box makers are suffering because they are hard disk dependent. They sell fewer units, they sell fewer MS licenses. Ms is hurt. All obvious.

      As little as we think of Ballmer around here, he is doing his fiduciary duty to report that the floods are affecting MS sales.

      Because sometimes a cigar IS just a smoke.

  4. It’s odd that despite the floods, Apple appears to be able to sell even more computers than ever before.

    It sounds like everybody else is simply looking for an excuse to blame their falling sales on, when in reality, sales are falling simply because nobody wants to buy their stuff.

    1. Apple has Solid State Drives in more models, so those are unaffected.

      Apple is feeling some pain, caused by those Macs with hard drives. However, their large purchase commitment contracts are giving them preferential treatment for what drives are available.

  5. “Chief Executive Officer Steve Ballmer doesn’t think the company is getting enough return on the billions it spends annually on marketing, the people said.”

    Yeah! That’s it! The marketing isn’t getting through to people!
    Call Seinfeld again.

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