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.
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: email@example.com