Microsoft (MSFT) Business Shift Off to a Bad Start - Nomura Securities
"Over the past quarter, investors have looked past the declining PC market, Windows is only 25% of the business, and focused on the enterprise side of the business and the move to more of a services business model," Sherlund notes. "This was much more disruptive than investors have expected, with Microsoft missing its guidance in every division and guiding lower. The recent reorganization does not fix the tablet or smartphone problem, it may help focus better on new opportunities and on transitioning to the services and devices market, but, the devices opportunity just received a $900 hardware write-off for Surface RT and investors may not even like the idea of wading deeper into this territory and the services business just put a damper on near-term growth in an already sluggish market. We think shareholder activism will likely stand a much better chance of surfacing and drive the stock higher in August or September."
The analyst cut FY 2013 EPS estimates to $2.75 to $2.59 and FY 2014 EPS from $3.02 to $2.75.
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Shares of Microsoft closed at $35.44 yesterday, with a 52 week range of $26.26-$36.43.