Microsoft Corp. tumbled the most in five months after Goldman Sachs Group Inc. said personal- computer market-share losses are accelerating and its push into consumer electronics hasn’t gained traction.
Shareholders should sell the stock, Heather Bellini, a New York-based analyst, said in a note to investors today, downgrading the shares to sell from neutral.
Sales of Redmond, Washington-based Microsoft’s new Windows 8 operating system are being held back by a global drop in PC sales. Shipments fell 14% worldwide in the first quarter, the worst decline on record, affecting every PC maker except for China’s Lenovo Group Ltd., according to a report from market researcher IDC.
“The company faces critical secular challenges given the deteriorating PC demand backdrop,” Bellini said. Microsoft’s market share will “gradually deteriorate unless Microsoft successfully repositions itself as a more meaningful participant in the new era of consumer compute,” she said.
Microsoft fell 4.5% to $28.91 at 9:46 a.m. in New York, and earlier touched $28.85 for the biggest intraday decline since Nov. 13. The stock had advanced 13% this year through yesterday, compared with an 11% gain for the Standard & Poor’s 500 Index.
Surface, the tablet device that went on sale Oct. 26, has also fallen short of analysts’ expectations. Microsoft sold about 1.5 million of the devices, its first-ever computer hardware product, through the first quarter, people with knowledge of the company’s sales said. That missed the 2 million in sales that UBS AG analyst Brent Thill had forecast for the December quarter alone.
Bellini is the only analyst who recommends selling among the analysts who report their advice on Microsoft to Bloomberg.
PC unit shipments fell to 76.3 million in the first quarter, a bigger drop than the 7.7% decline IDC had forecast, the researcher said yesterday. The drop was the steepest since IDC began tracking shipments in 1994.
The last time global shipments experienced a double-digit percentage decline was in the third quarter of 2001, when the market was wrecked by the Sept. 11 terrorist attacks in New York and the technology bubble’s burst.
Gartner Inc., another market-research firm, said PC shipments declined 11% in the first quarter to 79.2 million units. Quarterly global shipments fell below 80 million machines for the first since 2009, Gartner said. IDC and Gartner both reported that PC shipments fell in the U.S., Europe and Asia.
Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.