Veteran financial analyst Rick Sherlund, settling back into his role covering Microsoft, is out this morning with a new report on what he calls “the next big thing” for the Redmond company — a future lineup of touch-based Windows 8 hybrid notebook/tabet computers based on Intel’s “Ultrabook” specifications for thin, light and connected machines with extended battery life.
This new “Ultrabook Touch” category won’t have a big impact during Microsoft’s current 2012 fiscal year, which began in July, write Sherlund and his team at Nomura Equity Research in their report this morning.
However, he predict a noticeable impact after that. He writes …
“We are bullish on fiscal 2013, anticipating a rich year of new products in high margin businesses including the launch of Windows 8 on a new breed of Ultrabook Touch devices which we believe will generate a compelling upgrade cycle, a new version of Office for Windows 8 code named Office 15 (with touch capabilities of the Windows Metro interface), and a significant new version of the Windows Server operating system (Windows Server 8).”
Sherlund is forecasting 11 percent revenue growth and 15 percent earnings growth for Microsoft in fiscal 2013, and strong growth in fiscal 2014 as prices for the Ultrabook Touch devices decline. That compares with his projection of 7 percent revenue growth and flat earnings for fiscal 2012.
He writes, ”We like the stock, not because of fiscal 2012, but because of the trends we see looking out to fiscal 2013 and 2014.”
Microsoft previewed Windows 8 in September. The new operating system comes with a tile-based interface and support new applications meant to make Windows tablets more competitive with the iPad but also designed to overhaul the experience on traditional PCs. Microsoft hasn’t yet said when Windows 8 will be released, but Sherlund predicts a beta at the Consumer Electronics Show in January.
Sherlund started covering Microsoft for Goldman Sachs when the Redmond company went public in the 1980s, and resurfaced at Nomura earlier this year, covering companies including Oracle and Salesforce in addition to Microsoft.