Sunday 19 November 2017

Microsoft down 9pc after poor results

The Microsoft booth at the 2013 Computex exhibition in Taipei, June 2013
The Microsoft booth at the 2013 Computex exhibition in Taipei, June 2013

Microsoft shares fell 9pc – a day after the software company posted dismal quarterly results due to weak demand for PCs and disappointing sales of its Surface tablets.

Brokerages Raymond James and Cowen cut their ratings on Microsoft stock by a notch to "market perform" and at least five others trimmed their price targets by as much as $3 (€2.30).

Price targets were cut as low as $35, below Thursday's closing price of $35.44. The shares fell to $32 on the Nasdaq.

FBR Capital Markets analyst David Hilal said Microsoft's revenue from Windows operating system in the fourth quarter was 9pc below his expectations.

"The key potential growth drivers (Windows 8, Surface) of the Microsoft story appear to be fading, heading into FY14," he wrote in a note.

Microsoft posted lower-than-expected quarterly earnings on Thursday, hit by a $900m write-down on its Surface tablets after it cut prices.

Earlier this week, Microsoft said it was drastically cutting Surface prices to entice buyers, reducing the value of the devices in its inventory.

It launched Surface tablets last year to challenge Apple's iPad, but sales have failed to meet expectations.

Microsoft's outlook points to a weaker PC market, shifts towards subscription revenue and a pause ahead of the Xbox One gaming console release, all of which are expected to put revenue growth under pressure, Morgan Stanley analysts said. Xbox is the only device by Microsoft that has found a following among consumers and a new version is expected to launch this year.

Irish Independent

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