This morning Microsoft (MSFT) was trading at $31.91, it’s lowest price in almost three months. This amounts to a 9% drop in price which is also its worse stock decline for over 34 quarters.
So as you would expect brokers and analysts are cutting their ratings on the software giant.
In fact, about 62% of analysts watching Microsoft have downgraded their share ratings to neutral. Only 32% have buy ratings.
One of the main problems is that investors are concerned about Microsoft CEO Steve Balmer’s recent itch to shake up his executive team with the major reorganizations he did earlier this month. The timing seems especially bad because Microsoft’s stock was having a stellar year. It had a 32% year-to-date gain which made it the third best performer on the Dow Jones Industrial.
But now investors are less confident that Microsoft has what it takes to deliver healthy growth in the coming months.
Another reason for the stock sell offs is that Microsoft has missed it’s own revenue estimates. Windows revenue was at $14.4 billion dollars but this was still $400 million dollars south of Microsoft’s own estimates which is one of its largest target misses in a while.
I have to wonder: will the Windows 8.1 update galvanize Windows sales again?
The bottom line is that the Windows product absolutely has to turn around for Microsoft’s stock to work. In my opinion Windows is the lifeblood of Microsoft and if Ballmer can’t make a break through here Microsoft is in serious trouble.
Microsoft stock continued to plummet today; it’s now the biggest single day decline since April 2000 – it’s down 12%