Microsoft stock punished as concerns multiply

Tue Jan 27, 2015 9:48pm EST
 
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By Bill Rigby

SEATTLE (Reuters) - Investors wiped $35 billion off Microsoft Corp's (MSFT.O: Quote) market value on Tuesday without any clear-cut, single explanation.

The world's largest software company, whose shares had climbed about 30 percent over the past 12 months to near 15-year highs, instead worried investors with a series of troubling signals in its earnings report and conference call on Monday.

"The results weren't that bad," said Scott Kessler, an analyst at Standard & Poor's Capital IQ. "What really struck people was that it wasn't just one thing and it wasn't just a handful of things that had obvious or easy fixes."

The panoply of Microsoft's problems included an unexpectedly soggy PC market after a buying rush sparked by the end of Windows XP, an ongoing dip in companies' spending on Office software, problems in Japan and China and a strong U.S. dollar eating away at the value of its huge overseas revenues.

Investors were aware of most of those issues before Monday, but the combination of concerns pushed Microsoft's stock down 9.25 percent to $42.66, its biggest one day fall since Chief Executive Satya Nadella took over last February.

Until Tuesday, Nadella had enjoyed fanatical support from investors, who lapped up his plan to redesign Microsoft as a leader in cloud and mobile computing.

There are now signs that investors are more skeptical of how quickly Nadella can drag the PC-based titan into the mobile world.

"They made a splash with Office for iPad, but it remains to be seen to what extent they are really going to be able to pull through substantial percentages of their legacy applications business to the cloud," said Kessler.   Continued...

 
Microsoft Corp Chief Executive Satya Nadella speaks at his first annual shareholders' meeting in Bellevue, Washington December 3, 2014.  REUTERS/Jason Redmond