MSFT: A Big Day - stock downgraded on back of PC sales 'turmoil' (15% down) and mobile offerings 'underwhelm'

This is a big day for Microsoft: it's stock has been downgraded to 'hold' from 'buy' on back of PC sales 'turmoil' (15% down) and they're criticised for "underwhelming" performance in new mobile markets.

I've always been sceptical of stock analysts recommendations, believing they are always over-stated. They don't want to 'offend' or be criticised by strong companies.

On that basis, will savvy investors take this as a 'sell' recommendation?

Unlike 2008/9, during the GFC, when their profits crashed, this isn't due to a one-off event.  This is mid-cycle when sales should be strong.

Note the sentence on "underwhelming" performance in mobile platforms. That is damning from analysts.

This is a Big Day for Microsoft: The Evil Empire is falling out of favour with the Gods of Finance on Wall Street.

What Ballmer and the Board do next is critical for the company.

Bill Gates could come back, rally the troops and refocus the company, but I'm not sure he would. He's been cashing out for a decade...

Should there be partying in the streets?

Nope... The PC O/S wars were settled in 2007 when the iPhone was introduced and the coffin nailed shut a year later when GOOG gave us Android, creating a free alternative to AAPL.

Unless Ballmer makes one or two Big Plays, this is now Microsofts future in Business. A slow, unsensational decline into obscurity and irrelevance over decades. Think Unisys (UIS), created in 1986 by a merger between #2 & #3 in the market, Burroughs and Sperry-Univac. They should've been #1, by turnover, in the I.T. industry, but never were. They imploded, now 10 times smaller.

A 2010 Joe Wilcox piece on this now looks prescient.


SAN FRANCISCO (MarketWatch) - Shares of Microsoft Corp. MSFT -0.50%  were downgraded Wednesday to hold from buy by BGC Partners which cited the "turmoil" in the personal computer industry.

Microsoft shares were last trading up 2% at $30.21.

"We are taking advantage of the recent strength in Microsoft shares and reducing our rating," analyst Colin Gillis wrote.

"We are increasingly concerned about turmoil in the PC industry, with Dell DELL +0.39%  attempting to go private, and reports that Hewlett-Packard HPQ +0.10%  may be broken up."

Gillis also said Microsoft's initiatives in tablets and smart phones "underwhelms."

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