BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Microsoft: J.P. Morgan Trims Ests; Weak Surface, PC Sales

This article is more than 10 years old.

J.P. Morgan analyst John DiFucci has trimmed his financial estimates for Microsoft, citing both lackluster demand for the company's Surface tablets and continued soft personal computer sales.

DiFucci sees Surface unit sales of just 700,000 units in the December quarter; he sees 2.6 million for the June 2013 fiscal year, and a measly 6 million for fiscal 2014. (A little perspective: Apple sold 14 million iPads in the September quarter.)

"We believe a number of factors, including price, the lack of cellular connectivity, and relatively lukewarm critical reviews will limit its broad appeal at this time," DiFucci writes. "In addition, at least some Surface sales will be cannibalistic to traditional laptop sales."

He adds that the PC market is likely to continue to struggle. Gartner, he notes, now sees December quarter units shipments down 5.5% year over year; previous guidance was for 7.7% growth in the quarter. Gartner now sees unit growth of 0.5% in 2013 and 4.7% in 2014, down from a previous forecast of 7.3% this year and 7.4% next year. Gartner sees PC unit shipments in the developed world dropping 12.2% in the December quarter, 3.7% this year and 0.6% next year.

For the December quarter, DiFucci is now projecting revenue of $21.0 billion and profits of 68 cents a share, down from a previous $21.4 billion and 72 cents. For FY 2013, he now sees $77.8 billion and $2.62 a share, down from $78.5 billion and $2.72. For FY 2014, DiFucci now expects $82.9 billion and $2.91 a share, down from $83 billion and $3.02.