This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Microsoft Downgraded on PC Slowdown

REDMOND, Wash. ( TheStreet) -- Microsoft (MSFT) has been downgraded by FBR Capital Markets ahead of its first-quarter results amid concern about a slowdown in enterprise PC demand and the impact of tablet devices.

The analyst firm downgraded Microsoft from outperform to market perform in a note released on Monday, and also lowered the software giant's price target from $32 to $27. Microsoft shares dipped 17 cents, or 0.74%, to $25.19 shortly after market open.

Microsoft

Better-than-expected results from chipmaker Intel (INTC) initially allayed fears of a sharp slowdown in PC sales, although FBR analyst David Hilal is skeptical about enterprise demand.

"Over the last six months, a few things have changed, causing us to be less optimistic about the shares," he wrote. "First, and most importantly, we believe the enterprise PC refresh cycle is likely to proceed at a slower pace than earlier expected."

FBR recently lowered its forecast for 2011 PC growth from 15% to 10%, amid lingering concerns about the broader economic climate.

Hilal also cited the challenge posed by tablet devices, which could cannibalize Microsoft's PC business. "Gone are the days when Microsoft could be late to the market, but, through immense resources, catch up and be relevant," he explained, alluding to Apple's (AAPL) iPad. Apple has sold about 7.5 million iPads since its launch earlier this year and has a massive head start on rivals HP (HPQ) and Dell (DELL), which will soon offer tablets running Microsoft's Windows 7.

Investors will be closely monitoring Microsoft's first-quarter results Thursday for any evidence of a downturn in IT spending. Microsoft, for example, struck a bullish tone during its recent fourth-quarter results, estimating that PC sales grew between 22% and 24%.

Analysts surveyed by Thomson Reuters expect Microsoft to report first-quarter revenue of $15.81 billion and earnings of 55 cents a share. Microsoft posted revenue of $12.92 billion and 40 cents a share during the same period last year, although this included a $1.47 billion revenue deferral related to a Windows 7 Upgrade Option program and sales of Windows 7 to OEMs and retailers before general availability. This deferral also impacted the company's earnings by 12 cents a share.

--Written by James Rogers in New York.

>To follow the writer on Twitter, go to http://twitter.com/jamesjrogers.

>To submit a news tip, send an email to: tips@thestreet.com

Readers Also Like:


Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,131.97 +100.83 0.59%
S&P 500 1,998.98 +14.85 0.75%
NASDAQ 4,552.7590 +33.8570 0.75%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs