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  (Source: windows8update.com)
Eroding Windows sales is hurting the stock price at Microsoft

Microsoft is the largest software company in the world and there is little to indicate that it will cease being the biggest gorilla in the cage anytime soon. Although profits at Microsoft were up and were greater than Wall Street expected, the company has seen its stock plummet and sales of its Windows operating systems are sagging. 

Microsoft offered up the financial details for its latest quarter yesterday. According to the numbers, Microsoft's Windows division saw sales of Windows 7 OS slide. This is attributed in part to the sagging PC sales that were down 1% in the same three month time period compared to a year ago. When PC sales sag, so do sales of Windows since the vast majority of PCs shipped run Windows in some flavor.

At the same time, some of the blame for sagging Windows sales and slowing PC sales is attributed the popularity of other gadgets and devices like the iPad. The iPad and other tablets are encroaching on the PC market in a noticeable way and many feel that trend will only grow.

As a result of Windows losing momentum in the marketplace and uncertainty of PC sales Microsoft has seen its stock price fall 1.2% to $26.37 in trading reports Reuters.

Capital Advisors Growth fund Channing Smith said, "Microsoft to me is no longer a growth stock, but it is a very attractive value stock. They continue to generate tremendous free cash flow. Their balance sheet is really unmatched." He continued, "What you will begin to see is a shift away from growth investors. You are seeing that transition where Microsoft is in no man's land, but I think they will become increasingly more attractive to value investors."

Over the last year, Microsoft's stock has lost 14% compared with an overall growth of 16% for the Nasdaq. While Windows slipped, other segments of Microsoft's business did well and took up the slack. Overall, net profit at Microsoft was up 31% in fiscal Q3 to $5.2 billion amounting to 61 cents per share. After excluding the tax benefit Microsoft profits still met analyst expectations.

Standouts for the quarter included the Office Division which saw a 21% increase in sales to $5.2 billion, and the Entertainment and Devices Division relied on the Xbox 360 and Kinect to rack up $1.9 billion in sales.

The much talked about deal for Bing to provide search results on Yahoo is still not performing as Microsoft had hoped with the division posting a loss of $726 million.



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RE: This always happens
By Smilin on 4/29/2011 4:01:45 PM , Rating: 2
Profit taking is usually seen just after a rise... "buy on the rumor, sell on th news".

In MSFTs case it doesn't seem to happen this way.


RE: This always happens
By michael2k on 4/29/2011 8:13:49 PM , Rating: 2
MSFT rose from $24.7 to $26.7 in the 10 days prior to earnings. That's enough for profit taking!

Of course the real "profit taking" occurred on Feb 4th after they announced they weren't going to push WP7 onto tablets. It fell from $28.28 to $24.7!


RE: This always happens
By Smilin on 5/2/2011 9:59:04 AM , Rating: 2
Most of that swell was due to intels earnings reports indicating PC sales were picking up. This time around (profit taking always happens to some degree) it was a dip in Windows sales that freaked investors. Next time it will be something else.

Microsoft has only posted a dip in growth during the worst of the 2008+ recession. Every other quarter/year they've posted gains or record gains.

I've no intention to sell anytime soon and I'll snatch at these low prices from time to time.


RE: This always happens
By michael2k on 5/2/2011 12:17:52 PM , Rating: 2
Really? Several quarters have dipped, even without the 2008 recession, in the last 7 years:
http://ycharts.com/companies/MSFT/eps_growth#compC...


RE: This always happens
By Smilin on 5/2/2011 1:21:32 PM , Rating: 2
"It's okay. The scenarios aren't that clear. But it's good looking. [Steve Jobs] does good design, and [the iPad] is absolutely a good example of that." -- Bill Gates on the Apple iPad

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