Follow us:

Microsoft Pri0

Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times technology reporter Matt Day.

April 11, 2013 at 9:39 AM

Veteran analyst Sherlund downgrades Microsoft in wake of steep PC shipment declines

Veteran Microsoft analyst Rick Sherlund, of financial services firm Nomura, has downgraded Microsoft stock from “buy” to “neutral.”

He did so following reports yesterday from research firms IDC and Gartner that showed steep declines in PC shipments last quarter — far steeper than was forecast.

IDC had said wordwide PC shipments plunged 13.9 percent compared to the same quarter last year — the steepest year-over-year quarterly decline since IDC began tracking the PC market quarterly in 1994. It placed much of the blame on Windows 8. Gartner, meanwhile, had said worldwide PC shipments dropped 11.2 percent from last year to the lowest level since the second quarter of 2009.

Nomura’s Sherlund wrote in his note to investors this morning:

The combination of Windows 8’s sluggish adoption and the absence of compelling new hardware have been disappointing, with no relief likely until later this year when Intel’s Haswell new notebook processor extends Ultrabook battery life to 10 hours and prices fall to an expected $600 level.

He included a bad news-good news analysis of what might come to pass later this year for Microsoft, issuing a rather dire outlook for Office’s — the company’s cash cow — reach among consumers but saying Office would retain its traditional hold among business users. Wrote Sherlund:

We believe half of the customers in the consumer market do not need Office and are unlikely to remain with Microsoft for notebooks or tablets, while the other half likely work in an office setting and continue to produce higher-value content in Office and could be receptive to a new generation of thin, light weight, touch-based notebooks offering instant on, 10 hours of battery life and at a price approaching $600 by year- end. While it is difficult to assess the pace of underlying PC unit growth in the second half and likely upgrade demand, we expect some directional improvement that could benefit the stock.

Microsoft shares, which had been up earlier this week agove $30 — possibly as a reaction to the news that the company along with 16 others had brought antitrust complaints against Google’s Android before the European Union — was down again today. The shares are trading this morning at $28.78, down $1.50.

At least two other analysts also downgraded their ratings on Microsoft shares, according to Bloomberg News. Heather Bellini at Goldman Sach downgraded Microsoft from “neutral” to “sell” while Stephen Turner at Hilliard Lyons downgraded it from “buy” to “neutral.”

Comments | More in Microsoft | Topics: gartner, idc, nomura


No personal attacks or insults, no hate speech, no profanity. Please keep the conversation civil and help us moderate this thread by reporting any abuse. See our Commenting FAQ.

The opinions expressed in reader comments are those of the author only, and do not reflect the opinions of The Seattle Times.

The Seattle Times

The door is closed, but it's not locked.

Take a minute to subscribe and continue to enjoy The Seattle Times for as little as 99 cents a week.

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited content access is included with most subscriptions.

Subscriber login ►
The Seattle Times

To keep reading, you need a subscription upgrade.

We hope you have enjoyed your complimentary access. For unlimited access, please upgrade your digital subscription.

Call customer service at 1.800.542.0820 for assistance with your upgrade or questions about your subscriber status.

The Seattle Times

To keep reading, you need a subscription.

We hope you have enjoyed your complimentary access. Subscribe now for unlimited access!

Subscription options ►

Already a subscriber?

We've got good news for you. Unlimited content access is included with most subscriptions.

Activate Subscriber Account ►