Updated from 11:19 a.m. EDT
In tech's land of falling stocks, one analyst has picked a winner:
Despite a nasty downturn in the desktop PC segment, Collins Stewart analyst Sandeep Aggarwal has raised Microsoft to the top pick among big tech stocks.
His reason for optimism is an earlier-than-expected arrival of the Windows 7 operating system. After widespread rejection of the Windows Vista software, Microsoft has learned some lessons and has rushed development of Windows 7. This idea that there's a
has been one of Aggarwal's favorite themes.
The June or July arrival of Windows 7 -- two to three months earlier than expected -- could contribute $1.5 billion in incremental revenue for Microsoft in the first 12 months of sales, Aggarwal wrote in a note Monday. His call helped push Microsoft shares up early, but at the close they were down 13 cents, or 0.9%, to $15.15.
More than 1 billion PCs run on Windows, and most of those users balked at upgrading their computers to meet the demands of Vista. Many opted to stick with Windows XP. This trend did not help chipmaker
, which now sits on a
amid a deepening PC sales collapse.
If Windows 7 lives up to its glowing early reviews -- TheStreet.com's gadget guy, Gary Krakow, found it "
" -- a small but significant chunk of PC users will upgrade to the new system or buy new computers running the next OS, say some analysts.
Aggarwal's also encouraged by a potential search deal with
and an upgrade to the Work software with Office 14 in 2010.
Microsoft needs Windows 7 to be a winner. The software company has been losing its lead in mobile operating systems with the rise of
Research In Motion's
has continued to attack Microsoft's online strategies through Web-based applications and the support of Android a mobile phone operating system embraced by phone makers like