News

Analyst Dials Down Microsoft Stock Forecast Amid 'Flat' Market

Due to sluggish PC demand, an analyst with financial services company Morgan Stanley has downgraded expectations for Microsoft's stock in the near term.

Microsoft's stock is "the cheapest stock in our coverage universe," wrote analyst Adam Holt in a Morgan Stanley research note, according to a Barron's news story. He added that Microsoft was already pricing its stock with low expectations for future PC and Windows sales

PC sales will be flat or low over the next two years, Holt predicted. And even though Microsoft sells other products besides Windows, the overall PC downturn will still have a negative effect.

"Given the continued sluggishness in the market in aggregate, we expect total PC units to be flat to down low single digits in CY13 and CY14," Holt wrote. "While MSFT's revenue has disaggregated from the PC market, the stock still tends to track it to a degree."

Microsoft's announcement this week that it sold 60 million Windows 8 licenses since the product's launch in October was factored into Holt's analysis. He remained pessimistic that Windows 8 would inspire corporate purchases of PCs. Holt expects corporate PC purchasing to shrink from 5 percent to 0.25 percent.

According to Holt, Microsoft's stock could get a boost if Microsoft were to sell Office for the iPad. Also, Microsoft could be helped if Congress gave the company a tax holiday, which might bring back $50 billion in cash. Microsoft avoids paying U.S. taxes by parking much of its cash overseas, which is a practice common to a number of U.S.-based high-tech companies.

Holt's predictions come a couple of weeks before Microsoft's actual financial reporting. The company is scheduled to announce second-quarter earnings for its fiscal-year 2013 period on Thursday, Jan. 24.

About the Author

Kurt Mackie is senior news producer for 1105 Media's Converge360 group.

Featured

  • Microsoft Offers Support Extensions for Exchange 2016 and 2019

    Microsoft has introduced a paid Extended Security Update (ESU) program for on-premises Exchange Server 2016 and 2019, offering a crucial safety cushion as both versions near their Oct. 14, 2025 end-of-support date.

  • An image of planes flying around a globe

    2025 Microsoft Conference Calendar: For Partners, IT Pros and Developers

    Here's your guide to all the IT training sessions, partner meet-ups and annual Microsoft conferences you won't want to miss.

  • Notebook

    Microsoft Centers AI, Security and Partner Dogfooding at MCAPS

    Microsoft's second annual MCAPS for Partners event took place Tuesday, delivering a volley of updates and directives for its partners for fiscal 2026.

  • Microsoft Layoffs: AI Is the Obvious Elephant in the Room

    As Microsoft doubles down on an $80 billion bet on AI this fiscal year, its workforce reductions are drawing scrutiny over whether AI's ascent is quietly reshaping its human capital strategy, even as official messaging avoids drawing a direct line.