NEW YORK (TheStreet) -- Microsoft (MSFT - Get Report) unveiled the next generation of devices in the Surface tablet line, the Surface 2 and the Surface Pro 2, despite underwhelming sales of previous models. In the financial year ended June 30, 2013, Surface revenue was $853 million, not enough to recoup the $900 million write-down on unsold tablet stock.
At the New York event, Microsoft said that the Surface Pro 2 has a 20% increase in performance and 75% improvement in battery life over the original Surface Pro. It also boasts a more powerful Intel (INTC) CPU, an improved kickstand and higher color accuracy display. The less-expensive Surface 2 offers a better display, improved kickstand and 25% more battery life.
Microsoft also announced ten times more apps in its Window Store, up from 10,000 a year ago to 100,000.
Stock movement was soft on the announcement with Microsoft shares only 0.16%, or 5 cents, lower to $32.74 at close of trading. Overall, Microsoft is leading the S&P 500 which is down 0.47%.
It's been a big month in consumer hardware with the release of a Samsung smartwatch, two new lines of Apple (AAPL - Get Report) iPhones and a last-ditch smartphone from BlackBerry (BBRY - Get Report).
TheStreet Ratings team rates Microsoft as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:"We rate Microsoft a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, notable return on equity, attractive valuation levels and impressive record of earnings per share growth. We feel these strengths outweigh the fact that the company shows weak operating cash flow."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Microsoft's revenue growth has slightly outpaced the industry average of 6.1%. Since the same quarter one year prior, revenues rose by 10.2%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Microsoft's debt-to-equity ratio is very low at 0.2 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 2.53, which clearly demonstrates the ability to cover short-term cash needs.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Software industry and the overall market, Microsoft's return on equity significantly exceeds that of both the industry average and the S&P 500.
- Microsoft reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, Microsoft increased its bottom line by earning $2.60 versus $2 in the prior year. This year, the market expects an improvement in earnings ($2.71 vs $2.60).
- You can view the full analysis from the report here: MSFT Ratings Report
Written by Keris Alison Lahiff.