This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Microsoft Sees Lower IT Spending

REDMOND, Wash. ( TheStreet) -- Despite beating Wall Street estimates in its fourth-quarter earnings report released Thursday, Microsoft (MSFT - Get Report) was the Dow's biggest decliner on Friday. Shares closed at $28.18, down 3.36%.

After a big holiday season consumer lift, Microsoft's next sales boost from the business sector looks a long way off.

Microsoft ripped through fiscal second-quarter sales targets by riding a massive wave of Windows 7-powered PC purchases at the end of last year, the software giant reported Thursday.

But while the consumer segment grew 12% for Microsoft, sales in the business unit fell 6% as enterprise customers continue to hold off on their IT investments.

"While consumer demand remains healthy, we have not seen a return of enterprise spending growth," Microsoft CFO Peter Klein told analysts on an earnings conference call Thursday.

Looking ahead, Microsoft executives also said they are seeing delays in renewals of sales agreements.

"Enterprise agreement sales cycles have lengthened," said Bill Koefoed, the software firm's investor relations chief, according to a transcript published by Seeking Alpha.

The comments not only provide a bleak update on what has been a long and painful IT spending drought, they suggest that an upturn could be years away. This is particularly troubling if your core business is desktop software, and your customers are exploring alternatives to the conventional Windows and Intel (INTC) boxes.

Comments last week from a group of chief information officers shed a bit of light on IT buying trends amid the downturn, and PC makers like Dell (DELL) and Hewlett-Packard (HPQ - Get Report), along with Microsoft and Intel, don't figure very strongly in the plan.

"Our desktop replacement strategy is done through attrition," Bill Eline, Parker Hannifin's CIO, told analysts last week at an IT spending summit. Eline said his company would likely increase IT spending about 2% this year. And the direction of that spending included a two-year plan to shift toward virtualization by replacing desktop computers with shared central computers.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
DELL $0.00 0.00%
HPQ $29.55 0.85%
MSFT $46.73 -0.57%
VMW $69.20 -4.20%
AAPL $111.69 0.08%


Chart of I:DJI
DOW 17,106.64 -25.22 -0.15%
S&P 500 2,014.89 +15.91 0.80%
NASDAQ 4,825.1440 -13.4990 -0.28%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs