Microsoft just reported earnings for the March quarter (Q3 of its fiscal year 2011), and Windows sales were off 4%. That’s almost exactly in line with IDC’s numbers for PC unit sales, which were down 3.5%.
Investors are selling the stock after hours — it’s down about 2%.
That’s probably because they were expecting Microsoft to echo Intel last week, which saw 17% revenue growth in its PC business despite the slowdown.
In a call, Microsoft investor relations head Bill Koefoed explained the discrepancy.
- Intel moved its netbook business to a different segment. This allowed Intel’s PC business to escape the dramatic slowdown in netbook sales. Koefoed said that Microsoft saw netbook sales drop 40%. Microsoft didn’t blame the iPad specifically, but it’s a reasonable assumption that low-cost computer buyers are turning more to tablets.
- Intel benefited from an inventory buildup by PC makers as it introduced its new Sandy Bridge processors during the quarter.
- Intel was reporting a 14-week quarter as it realigned its fiscal year to the calendar year. Microsoft’s quarter ran on 13 weeks.
- Intel’s average selling price went up, while Microsoft kept prices the same from last year.
Intel also supplies chips for the Mac, which showed year-to-year sales growth of 25% during the quarter. Microsoft doesn’t get the same immediate benefit from Mac sales, although it does sell Office for the Mac.