On the Call: Microsoft executives


Microsoft Corp. watchers were expecting weak PC sales due to the impact that flooding in Thailand has had on hard disk drive supplies. But not as weak as the company reported on its second-quarter earnings call on Thursday.

Microsoft said Thursday that it expected PC sales to have fallen 2 percent to 4 percent in the final quarter of 2011 from a year earlier.

That was worse than a 1.4 percent decline estimated by research firm Gartner and a 0.2 percent declined pegged by IDC.

Analysts asked about the difference and whether problems would persist into the current quarter.

QUESTION: If inventories were reduced in the pipeline, that might reconcile why … you are viewing the industry somewhat differently. I’m curious if you think that’s going to continue into the next quarter.

RESPONSE: (Bill Koefoed, Microsoft’s general manager of investor relations) That’s impossible to say. I’d say for this quarter we obviously are very confident and comfortable with the estimate. As we said during the remarks, we expect the impact to continue on at least through the next quarter. And I think that the best thing to do at the end of that, we’ll probably all have a better view and we can kind of assess where we are and what it looks like going forward.

I’d say just generally on the inventory … there was an inventory drawdown to end the quarter. I think both IDC and Gartner have talked about the fact that the overall supply for PCs is obviously leaner than it was three months ago. So we’ll have to see how fast people kind of ramp back up, how fast the PC ecosystem rebounds, and that will obviously impact … inventory at the end of the quarter as well.