Two influential analysts downgraded Microsoft’s shares this morning, another blow to the Redmond company as it struggles to gain traction in smartphones and tablets, and feels the impact of slumping computer shipments.
Goldman Sachs analyst Heather Bellini downgraded Microsoft to “sell” from her previous rating of “neutral.” Nomura analyst Rick Sherlund, meanwhile, downgraded the shares to “neutral” from his previous rating of “buy.”
The reports follow word from IDC that shipments of traditional computers fell nearly 14 percent in the first quarter, the steepest decline in the nearly two decades that the research firm has been tracking shipments on a quarterly basis. IDC said in its report that Windows 8 was depressing the market, with consumers and businesses reluctant to upgrade to the radical new interface.
“The combination of Windows 8’s sluggish adoption and the absence of compelling new hardware have been disappointing, with no relief likely until later this year when Intel’s Haswell new notebook processor extends Ultrabook battery life to 10 hours and prices fall to an expected $600 level,” writes Nomura’s Sherlund, who originally made his mark as the longtime Goldman analyst on Microsoft.
“The company faces critical secular challenges given the deteriorating PC demand backdrop,” Bellini said in a note to clients, according to Bloomberg News. Microsoft’s market share will “gradually deteriorate unless Microsoft successfully repositions itself as a more meaningful participant in the new era of consumer compute.”
Bloomberg notes that Bellini is now the only major analyst covering Microsoft with a “sell” rating on the stock.