Microsoft (MSFT) Stock Is Down Today on Intel's Lower Revenue Forecast

Microsoft (MSFT) is falling Thursday following Intel's (INTC) lower first quarter revenue forecast.

Author:: Lindsay Ingram
Publish date:: Mar 12, 2015 11:49 AM EDT

NEW YORK (TheStreet) -- Shares of Microsoft (MSFT) - Get Report were falling 1.9% to $41.18 Thursday after chipmaker Intel (INTC) - Get Report lowered its first quarter revenue guidance, citing weak demand for PCs.

Intel said it now expects revenue of $12.8 billion, plus or minus $300 million (a range of $12.5 billion to $13.1 billion), for the first quarter. The chipmaker previously expected first quarter revenue of $13.7 billion, plus or minus $500 million (a range of $13.2 billion to $14.2 billion).

Analysts surveyed by Thomson Reuters expect Intel to report revenue of $13.7 billion for the first quarter.

Intel said the lower revenue forecast is due to "weaker than expected demand for business desktop PCs and lowers than expected inventory levels across the PC supply chain." The company believes the lower demand and inventory patterns are a result of "lower than expected Windows XP refresh" in small and medium businesses and "challenging macroeconomic and currency conditions, particularly in Europe."

Shares of Intel were falling 4.4% to $30.91.

TheStreet Ratings team rates MICROSOFT CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate MICROSOFT CORP (MSFT) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, solid stock price performance and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

Despite its growing revenue, the company underperformed as compared with the industry average of 10.4%. Since the same quarter one year prior, revenues slightly increased by 8.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
Despite currently having a low debt-to-equity ratio of 0.31, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that MSFT's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.24 is high and demonstrates strong liquidity.
Compared to where it was a year ago today, the stock is now trading at a higher level, regardless of the company's weak earnings results. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
The gross profit margin for MICROSOFT CORP is rather high; currently it is at 67.45%. Regardless of MSFT's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 22.14% trails the industry average.
You can view the full analysis from the report here: MSFT Ratings Report