Microsofts Windows delay threatens to erode demand

March 22 | Updated: Mar 23 2006, 05:51am hrs
Microsoft Corps delay in the next version of Windows software sent shares of computer makers lower on concern that a January release will stifle demand during the holiday shopping season.

PC makers were relying on a November introduction of Windows Vista to bolster holiday sales that account for about 30% of purchases. Redmond, Washington-based Microsoft, the worlds largest software maker, was already two years late on the project and hasnt released a new Windows since 2001.

Few things could have done more damage to the 2006 PC market than the slip of Windows Vista, Rob Enderle, president of San Jose, California-based researcher Enderle Group, said in an interview. This will have an adverse impact on a broad cross-section of components and platform PC suppliers. The PC industry will lose more than $4 billion in sales this year from the delay, Gartner Inc analyst Charles Smulders said.

Microsoft gets about 31% of its revenue from Windows, and the delay may cause it to lose almost $500 million in the holiday quarter, said Charles Di Bona, an analyst at Sanford C Bernstein. The company is depending on Vista to revive growth.

Shares of Microsoft, PC makers and chip manufacturers fell. Microsoft shares declined 75 cents to $26.99 at 10:15 AM New York time in Nasdaq Stock Market composite trading. Dell Inc, the worlds largest PC maker, fell 26 cents to $30.01 in Nasdaq trading, and No 2 Hewlett-Packard Co dropped 54 cents to $33. Seagate Technology, the No 1 maker of computer-disk drives, dropped 3.2% and Western Digital Corp. fell 2%. Samsung Electronics Co, the largest memory-chip maker, fell 3.3% in Seoul.

Bloomberg