NEW YORK — Shares of Microsoft Corp. tumbled in premarket trading Friday after the software giant behind Windows, the Xbox and Surface tablets reported disappointing results for the latest quarter that included a large write-off for its Surface RT business.
Microsoft's adjusted earnings of 66 cents per share were well below analysts' expectations of 75 cents, as polled by FactSet. Revenue grew 10 percent to $19.90 billion, but it was also below the $20.72 million that analysts expected.
Janney Capital Markets analyst Yun Kim called the quarter's results "weak," with all five of Microsoft's divisions reporting revenue below Wall Street's expectations. Windows, Kim added, came in "especially weak," reflecting not only the ongoing decline of the PC, but lack of demand for Surface and other tablets running Windows.
Kim kept a "Hold" rating on the stock.
Cowen & Co. analyst Gregg Moskowitz downgraded Microsoft to "Neutral" from "Buy," and cut his price target to $33 from $38, saying the company "struggled far more than we had expected."
"We are much less confident that the co. can deliver healthy growth" in the near term, Moskowitz wrote, citing the magnitude of the Windows decline, the challenges for Surface, pressure on profit margins and the company's reorganization plans.
Microsoft announced a major reorganization late week, aimed at helping it transform into a "devices and services" company that is less reliant on providing software for personal computers. The earnings miss raised new questions as to whether the transition will succeed.
Shares of Redmond, Wash.-based Microsoft fell $2.94, or 8.3 percent, to $32.50 in premarket trading. The stock has traded between $26.26 and $36.43 in the past 52 weeks, and closed Thursday at $35.44m, up 33 percent for the year.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Microsoft's adjusted earnings of 66 cents per share were well below analysts' expectations of 75 cents, as polled by FactSet. Revenue grew 10 percent to $19.90 billion, but it was also below the $20.72 million that analysts expected.
Janney Capital Markets analyst Yun Kim called the quarter's results "weak," with all five of Microsoft's divisions reporting revenue below Wall Street's expectations. Windows, Kim added, came in "especially weak," reflecting not only the ongoing decline of the PC, but lack of demand for Surface and other tablets running Windows.
Kim kept a "Hold" rating on the stock.
Cowen & Co. analyst Gregg Moskowitz downgraded Microsoft to "Neutral" from "Buy," and cut his price target to $33 from $38, saying the company "struggled far more than we had expected."
"We are much less confident that the co. can deliver healthy growth" in the near term, Moskowitz wrote, citing the magnitude of the Windows decline, the challenges for Surface, pressure on profit margins and the company's reorganization plans.
Microsoft announced a major reorganization late week, aimed at helping it transform into a "devices and services" company that is less reliant on providing software for personal computers. The earnings miss raised new questions as to whether the transition will succeed.
Shares of Redmond, Wash.-based Microsoft fell $2.94, or 8.3 percent, to $32.50 in premarket trading. The stock has traded between $26.26 and $36.43 in the past 52 weeks, and closed Thursday at $35.44m, up 33 percent for the year.
Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.