Microsoft surprised Wall Street with a better-than-expected profit, helped by resurgent corporate spending after the belt-tightening of past years. But its shares stayed flat as investors expressed concern about the weakness of overall computer sales amid a faltering US recovery.
The world's largest software maker, whose Windows operating system runs on 90% of the world's computers, is heavily dependent on PC sales, which grew only 3%in the quarter. “Outstanding numbers when you take a first look at it, but then you delve into them, Windows missed expectations by $300 million,” said Brendan Barnicle , analyst at Pacific Crest Securities .
Sales of smartphones and tablets are expected to grow much more quickly than PCs over the next few years, posing athreat to Microsoft's key market.
But some analysts argued that fears of tablets and other hot-selling gadgets replacing PCs were overblown -- at least for now. “We've gotten over 300 million Windows 7 licenses sold. I mean, PCs are not disappearing. Put that into perspective with 7 million tablets sold last quarter from Apple ,” said BGC Financial's Colin Gillis.
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