Microsoft's stock slides after dismal PC shipment reports

Several Wall Street analysts downgrade the stock
  • (Computerworld (US))
  • — 11 April, 2013 20:26

Microsoft's stock took a beating in trading today after a pair of research firms said PC shipments in the first quarter were down as much as 14% from the year before.

As of 4 pm. ET, shares of Microsoft were down nearly 5 per cent to $US28.82.

Other technology stocks, including those of Dell, Hewlett-Packard and Intel, were also off, down eight-tenths of a percentage point, 6.5 per cent and 1.7 per cent, respectively.

In its estimate of first-quarter PC shipments, research firm IDC partly blamed Microsoft's Windows 8 for the drop in sales, said HP's shipments declined 24% compared to the same quarter of 2012, and said Dell's shipments dropped 11 per cent. HP and Dell were ranked by IDC as the world's largest and third-largest PC sellers.

On the Hong Kong exchange, Chinese PC maker Lenovo, which held second on IDC's list and had flat sales last quarter, fell 5.8 per cent during trading.

At least three Wall Street analysts also downgraded Microsoft's stock.

Goldman Sachs analyst Heather Bellini changed her recommendation from "neutral" to "sell," while Rick Sherlund of Nomura and Stephen Turner of Hilliard Lyons switched their positions from "buy" to "neutral," according to Bloomberg.

They followed Merrill Lynch's managing director Kash Rangan, who last week cut his rating from "buy" to "neutral."

In a note to investors quoted by Barron's last week, Rangan noted that about 25 per cent of Microsoft's Windows revenue stemmed from consumer PC purchases, which he presciently said would be lower than expected for the quarter.

Rangan also reiterated what other analysts -- both industry and financial -- have said since last fall, that display shortages have kept prices of touch-enabled Windows PCs too high for consumers to stomach.

Patrick Moorhead, an industry analyst at Moor Insights & Strategy, pointed to Rangan's downgrade last week as an example of Wall Street "asking the right questions."

When asked to explain that comment, Moorhead cited the intertwined divisions at Microsoft, where Windows, although not the group that brings in the most revenue, is the foundation that the Business -- responsible for Office -- and the Server and Tools divisions stand upon. Without Windows, and its dominant position among operating systems, the thinking goes, Office sells next to no suites and Server and Tools may as well shut the doors.

"Windows is the driver [for Microsoft's revenue]," Moorhead said in an interview last week. If Windows sales slide because PC sales have badly slumped -- and they look likely to languish for the foreseeable future -- the rest of Microsoft may follow, albeit not immediately.

"Microsoft has a tremendous amount of exposure here," said Moorhead. "What [analysts like Rangan] are doing is looking beyond some reasonably good financials and asking, 'What if the franchise really starts slipping away?'"

Moorhead wasn't counting Microsoft dead and gone -- "The game is not over with," he said -- but neither was he overly optimistic. "So far, their prognosis doesn't look good at all."

Microsoft will hold its quarterly earnings call with Wall Street analysts next week, on April 18 when it will reveal revenue figures.

Gregg Keizer covers Microsoft, security issues, Apple, Web browsers and general technology breaking news for Computerworld. Follow Gregg on Twitter at @gkeizer, on Google+ or subscribe to Gregg's RSS feed. His email address is gkeizer@computerworld.com.

See more by Gregg Keizer on Computerworld.com.

Read more about windows in Computerworld's Windows Topic Center.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Gregg Keizer

Computerworld (US)
Topics: goldman sachs, desktop pcs, Desktop Apps, hardware systems, Windows, operating systems, Hewlett-Packard, Bloomberg, HP, Dell, IDC, Microsoft, Lenovo, software, intel, PCs
Comments are now closed.

Latest News Articles

Most Popular Articles

Follow Us

GGG Evaluation Team

Kathy Cassidy

STYLISTIC Q702

First impression on unpacking the Q702 test unit was the solid feel and clean, minimalist styling.

Anthony Grifoni

STYLISTIC Q572

For work use, Microsoft Word and Excel programs pre-installed on the device are adequate for preparing short documents.

Steph Mundell

LIFEBOOK UH574

The Fujitsu LifeBook UH574 allowed for great mobility without being obnoxiously heavy or clunky. Its twelve hours of battery life did not disappoint.

Andrew Mitsi

STYLISTIC Q702

The screen was particularly good. It is bright and visible from most angles, however heat is an issue, particularly around the Windows button on the front, and on the back where the battery housing is located.

Simon Harriott

STYLISTIC Q702

My first impression after unboxing the Q702 is that it is a nice looking unit. Styling is somewhat minimalist but very effective. The tablet part, once detached, has a nice weight, and no buttons or switches are located in awkward or intrusive positions.

Resources

Best Deals on GoodGearGuide

Compare & Save

Deals powered by WhistleOut
WhistleOut

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?