Microsoft says the Thai floods did more damage to the hard disk drive and component supply chain than people thought and that industry-wide PC sales in Q4 will probably drop more than the ~1% loss analysts have projected.

According to Bloomberg Tami Reller, CFO and CMO of Microsoft’s Windows unit, broke the news to a Nomura Equity Research conference in Las Vegas Tuesday while Bill Koefoed, general manager of investor relations at Microsoft, told a JPMorgan Chase conference the same thing.

Reller warned that it could take a few quarters to recover.

Windows has missed sales estimates in three of the last four quarters and is now likely to miss again. The tablet trend is also having an impact as is the general economic malaise and budget cuts. Microsoft is developing Windows 8-on-ARM for tablets but availability is still believed to be some months off.

Intel trimmed its Q4 revenue projections by a billion dollar last month because of the floods, which affected about 25% of world’s drive output.