Ivy Lessner
"Each percentage point in incremental growth in the client business drives one cent in EPS," Kirk Materne, analyst with Bank of America Securities, wrote regarding Vista in a recent report issued Friday. "We continue to see room for 2 to 3 cents of EPS upside based on strength in the client business alone."
Michael Cherry, a senior analyst at consulting firm Directions on Microsoft, says Vista "is doing what I expected: It's selling at the run rate of PCs ... nor is there anything so wrong with it that it would have sold slower," Cherry said. Microsoft Chief Operating Officer Kevin Turner said Vista has gotten traction in only 19% of the enterprise and mid-market space. The other 80% provides a "big opportunity" for 2008 sales. The focus on Vista is no smaller after the company's financial analyst meeting last week, which touted the company's future plan regarding Web-based software delivery and online operations, without immediate certainties as to when those strategies would deliver. Microsoft's Client division, which makes Windows, contributed more than 28% of overall revenue in Microsoft's recent fourth quarter. Shares of Microsoft rose to above $30 late last year in anticipation of Vista's January 2007 launch, only to fall back below $28 after its release. The stock rebounded, but then fell amid the heavy selloff late last week. Trading recently at $29.63, the shares are essentially flat over the past three-and-a-half years.
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