Microsoft Corp.’s (Nasdaq: MSFT) fiscal second-quarter earnings will be less than previously expected due to weak demand for personal-computers and the company’s new tablet, Surface, according to Brent Thill, an analyst at UBS AG.
Thill cut his estimate for Surface sales in half, to 1 million units for the period, which ended in December, citing “gloomy sentiment” after the holiday shopping season, he wrote in a research report Monday.
Apple (Nasdaq: AAPL), meanwhile, is expected to have sold well over 20 million iPads.
“People are choosing iPads over Surfaces, says Thill,” noted Business Insider. “He also blames narrow distribution. Microsoft only sold the Surface at its stores last quarter.”
Thill cut his earnings per share projection for the quarter by 8 cents to 76 cents.
Microsoft initially limited sales of the device to its own roughly 60 retail outlets and Surface also failed to draw many customers away from Apple’s iPad and rival devices with Google’s (Nasdaq: GOOG) Android software.
A new business-focused version of Microsoft’s tablet, Surface Pro, is expected to go on sale this month and may fare better against the iPad, Thill said.
“Surface Pro is the more promising” model, he wrote in the report.
(Bloomberg contributed to this report.)
