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Apps & Software

Windows 7: Is the PC Recovery A Mirage?

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By Douglas A. McIntyre Published
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Microsoft (MSFT) announced that its revenue rose 14% in the last quarter to $19 billion. EPS rose 57% to $.74. Most of the improvement was due to the sales of Microsoft’s new PC operating system. “Exceptional demand for Windows 7 led to the positive top-line growth for the company,” said Peter Klein, chief financial officer.

The Windows results pushed revenue and operating profits up at an extraordinary rate. The unit that includes results for the new OS increased sales from $4.1 billion a year ago to $6.9 billion in the most recent quarter. Operating profit rose from $2.7 billion to $5.4 billion, evidence of the profitability of Microsoft’s software businesses.

The company said improving PC and server sales accounted for much of the improvement, but that may be unintentionally misleading.

Global PC sales may be up as much because of upgrades to Windows 7 machines as they are because demand is improving as the economy strengthens. Windows 7 adoption rates may be high for several quarters, and that may mask problems in the hardware business.

Microsoft may also be overly wishful about the future prospects of PC sales. If they are  being artificially helped by Windows 7 adoption, the hardware growth that Microsoft believes will drive its sales over the next several years may not survive beyond the enthusiasm for Redmond’s latest big product.

Douglas A. McIntyre

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About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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