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Microsoft: Lower PC Shipments Could Hurt Revenue

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (Trefis) -- Microsoft (MSFT) is scheduled to report its second-quarter earnings on Thursday.

Just ahead of that report, Microsoft said its personal computer sales in the fourth quarter of 2011 could be lower than projected because of the floods in Thailand. Analysts had projected a 1% decrease in PC shipments last quarter, but Microsoft indicated that it could be even lower.

Most desktops and personal computers run the Windows OS by Microsoft. Other competitors include Mac OS X by Apple (AAPL) and open source Linux distributions. Windows is one of Microsoft's most profitable businesses and accounts for around 25% of the $32 Trefis price estimate for Microsoft, which stands nearly 15% above the market price.

Check out our complete analysis for Microsoft here.

We currently expect desktop sales to remain almost flat in 2011, at 140 million units. You can tweak this widget to see how any impact in desktop sales could impact Microsoft's Trefis price estimate.

A decline in the size of the global desktop market could have a direct impact on the revenue generated from Windows sales, and hence Microsoft's stock price. Windows sales have been slowing down in the last few quarters as Windows 7 was launched more than two years ago. We expect Windows sales to pick up again in 2012, as Microsoft launches Windows 8, the next version of Windows which will work on desktops, notebooks and tablets.

2012 could be a record year for Microsoft in terms of Windows sales, provided it sticks to its schedule of launching Windows 8 by mid-2012.

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This commentary comes from an independent investor or market observer as part of TheStreet guest contributor program. The views expressed are those of the author and do not necessarily represent the views of TheStreet or its management.

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