Microsoft Warns PC Sales Worse Than Expected Because Of Thai Floods

Thai Flood

[credit provider=”AP”]

Microsoft’s investor relations head Bill Koefoed warned that Q4 PC sales may be lower than it forecast because floods in Thailand knocked out factories that make PC parts.Microsoft previously expected PC unit growth around 5% from last year. Now, based on market forecasts from IDC and others, Koefoed expects PC sales to show a slight decline from last year’s quarter.

Microsoft shares dropped about 1.5% after hours on the news.

Specifically, Koefoed said that PC sales growth expectations were in the mid-single digits in October, but noted that IDC and some other analysts “lowered that” to about -1% in December. Then, he said, “You’ll likely see that number decline further, as the impact has been felt faster than people had anticipated.”

He also said that the supply chain is “resilient” and that “some vendors have talked about how they’re recovering faster than expected.”

Koefoed was speaking at an event for financial analysts at the Consumer Electronics Show — you can follow the webcast on Microsoft’s investor relations site.

Update: Here’s exactly what Koefoed said, from the transcript:

First of all, what’s happened in Thailand is unfortunate, and obviously our first thoughts are for the people in Thailand that were impacted by that. It actually did touch quite a few people personally. Second of all, I would say, if you even go back to the PC market, expectations that we had back in October, if you look at third parties, they were kind of, call it, mid-single digit expectations for the PC market, if you go back to October. IDC and Gartner and some others kind of lowered that, I think, they were kind of at minus 1 as they updated the PC market forecast in December. As the numbers come out, as the results are projected, you likely see that number decline further as the impact has been felt faster than I think people had anticipated. The OEMs are working hard, the supply chain is pretty resilient, getting factories back up. I think some of the supply chain vendors have talked about how they are recovering faster than they had expected, but certainly it has had an impact on the PC market.