Microsoft Forecast Sees Windows Margin Gains

Trefis members forecast a loss of market share for Windows but a gain on margins.
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Microsoft

(MSFT) - Get Report

competes with

Google

(GOOG) - Get Report

and

Apple

(AAPL) - Get Report

in the PC operating system market.

We currently have a Trefis price estimate of around $28 for Microsoft's stock, about 11% above the current market price of $25.

Trefis members have created forecasts for two key drivers for Microsoft over the last week: (1) Windows' Market Share of PCs and (2) Windows OS Operating Margin. The members' forecasts suggest that Windows' Market Share of PCs will trend below the Trefis estimate, while Windows OS Operating Margin will trend above. These projections indicate a combined upside of around 4% for Microsoft's stock.

We estimate that the Windows Operating System constitutes around 40% of the $28 Trefis price estimate for Microsoft's stock. Below are charts showing recent estimates created by Trefis members for the two drivers in detail.

The average of forecasts for Windows' Market Share of PCs created by Trefis members indicated a projected decrease from 73.5% in 2010 to around 72% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of an increase from 75% in 2010 to 76% by the end of the Trefis forecast period.

The member estimates imply a downside of 1% to the Trefis price estimate for Microsoft's stock. In the past, Windows' Market Share of PCs has decreased from 76% in 2005 to 74% in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Microsoft's stock to Windows' Market Share of PCs.

Our complete analysis for Windows' Market Share of PCs is

here

.

The average of forecasts for Windows OS Operating Margin created by Trefis members indicated a projected decrease from around 71% in 2010 to around 66% by the end of the Trefis forecast period, compared to the baseline Trefis estimate of a decrease from around 64% in 2010 to around 61% by the end of the Trefis forecast period.

The member estimates imply an upside of 5% to the Trefis price estimate for Microsoft's stock. In the past, Windows OS Operating Margin has decreased from around 77% in 2006 to around 68% in 2009.

Disagree? You can drag the forecast trend-line above to express your own view, and see the sensitivity of Microsoft's stock to Windows OS Operating Margin.

Our complete analysis for Microsoft's stock is

here

.

Trefis

is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the U.S.