After weeks of reports that sales of Windows 8, Surface tablets and other Microsoft products may not have done as well as expected, some concrete numbers may finally be coming as the company reports its fiscal second-quarter earnings Thursday.
This is the first quarterly report since the late October launch of Windows 8, the radical revamp of Microsoft’s flagship operating system, and of Surface, the company’s first branded computing device.
So far, reports from research firms including Gartner, IDC and Canalys have not been encouraging. All three firms found year-over-year declines in worldwide PC shipments, and all three said the Windows 8 launch did not boost that market.
Microsoft has said it has sold 60 million Windows 8 licenses so far, putting the new operating system on a trajectory similar to that of Windows 7. But licenses include sales to PC manufacturers as well as upgrades, and are not necessarily a clear gauge of sales to end users.
- Unusual motel sting casts wide net on illicit activity
- Costco will buy most farmed salmon from Norway, not Chile
- Italian court throws out Knox conviction once and for all
- Priced out? Growing numbers appear to be fleeing King County
- 5 Seahawks takeaways from the NFL League Meetings
Most Read Stories
“I expect a disappointing report,” said Michael Yoshikami, chief executive of money-management firm Destination Wealth Management. “I don’t think it will be disastrous. Just soft.”
Analysts’ consensus estimate is for earnings per share of 75 cents on revenue of $21.56 billion.
Yoshikami says he doesn’t think Windows 8 has boosted sales. And Microsoft, which does not yet have a strong presence in the tablet market, doesn’t look likely to have offset the decline in PC shipments with tablet sales.
“I believe they need to fix Windows 8 and optimize it, at least temporarily, for non-touch-screen computers, including [restoring] the Start button and multitasking,” he said. “ I think if they don’t do that, it’s going to continue to create problems for them.”
There have also been reports that sales of the Surface RT tablet have not met internal expectations. (Surface RT is the version of the Surface tablet that runs a variant of Windows 8 designed for tablets running on battery-saving ARM processors. Microsoft is launching Surface Pro, which runs on the more powerful Intel Core i5 processor, in February.)
Todd Lowenstein, a vice president with HighMark Capital Management, says he expects Microsoft to report that 2 million Surface devices have been sold.
He expects the company to meet or exceed analysts’ estimates, given that analysts have been revising their estimates downward.
Lowenstein also believes the company is making progress on its transition to a devices-and-services, hybrid cloud and traditional software company. And that progress, he believes, is not being reflected in the company’s share price.
“The market is skeptical and, frankly, not matching up with what we’re hearing from CIOs in terms of Microsoft’s mindshare in these companies,” he said. “We think there’s a disconnect between the perception and the reality. … Hidden behind this perception of a failed consumer company is a crown jewel enterprise company.”
Microsoft shares closed Tuesday at $27.15, down 10 cents.
Janet I. Tu: 206-464-2272 or email@example.com. On Twitter @janettu.