Microsoft Corp. (MSFT) sees no immediate sign of a letup in the difficult trading environment it has seen over the past two quarters, its chief financial officer said Thursday.
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In contrast with some technology firms such as Intel Corp. (INTC), EMC Corp. (EMC) and Adobe Systems Inc. (ADBE), which have said recently that the worst may be over, the world's largest software maker warned investors Thursday to batten down the hatches for a sustained period of weakness.
"Trading conditions will remain difficult throughout this quarter [fiscal fourth quarter] and potentially through the calendar year," Microsoft CFO Chris Liddell said.
Asked later by one analyst if he had seen trading conditions improve throughout the fiscal third quarter ended March 31, he said he hadn't.
The primary reason for Microsoft's current pain is the steep drop in the PC market, as both corporate customers and consumers are holding onto cash. Revenues for Microsoft's two biggest business units, its client and business divisions, are both highly dependent on PC sales.
Much of the reason for slower PC sales is the continued strength of netbooks - small, low-priced laptops designed primarily for lightweight computing tasks such as surfing the Internet and writing emails. Outside of the netbook sector, Liddell said sales of Windows from OEM partners had declined by 19%.
Customers' continued reluctance to spend means that when they are buying computers, they are typically opting for lower-priced versions of the software, he said. Sales of "premium" versions of the Windows product were 20% lower in the fiscal third quarter.
Microsoft said its annuity revenues - sales that come from recurring contracts with business customers - were holding up well with corporate software renewal rates relatively healthy, but it was having trouble persuading customers to buy additional new software.
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BY Jessica Hodgson
Source：THE WALL STREET JOURNAL
Dow Jones Newswires; 415-439-6455; jessica.hodgson@dowjones.com
Copyright ©2009 Dow Jones & Company, Inc. All Rights Reserved.
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