Charles Sizemore and Jeff Reeves Discuss the Microsoft Drubbing

From Jeff Reeves at The Slant:

It was a rough Thursday for PC stocks Microsoft (NASDAQ:MSFT), Intel(NASDAQ:INTC), Hewlett-Packard (NYSE:HPQ) and the like.

That’s because late Wednesday, IDC reported PC sales slid nearly 14% in the first quarter, well below the 7.7% decline that was expected and the worst drop since the firm began tracking the sector in 1994.

Ouch.

To add insult to injury, Microsoft was downgraded Thursday by Goldman Sachs(NYSE:GS), Normura and Hilliard Lyons. All  cited the ugly IDC numbers.

So what’s going on? Can these companies — particularly Microsoft — evolve?

Charles Sizemore thinks so, based on hopes of getting Microsoft Office software on Apple and Android devices.

The tug-of-war between hardware and software always favored keeping Office native to the Microsoft Surface tablet. But that may be changing.

“It’s a bit of a game in that does Microsoft … minimize their plans to grow their tablet business by pushing Office onto their competitors, or do they hold out and see if they can generate margins?”

Charles thinks the rumor mill is strongly favoring a push onto Apple (NASDAQ:AAPL) devices powered by iOS or mobile gadgets running Android from Google(NASDAQ:GOOG).

There’s also hope for the xBox business with innovative in-home entertainment options, Charles says.

 

Charles Lewis Sizemore, CFA, is chief investment officer of the investment firm Sizemore Capital Management and the author of the Sizemore Insights blog.

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