“If you’re holding your shares of Microsoft until you can book a 10% capital gain, we have a bit of bad news. You may be waiting a very long time. Despite a spate of happenings at Microsoft — including its much heralded $3 dividend and the hiring of Ray Ozzie and the acquisition of his company — the giant tech stock has refused to edge upward,” Bill Snyder writes for TheStreet.
“Making matters worse, Microsoft’s inertia doesn’t seem to be a short-term malady. The company’s top-line growth has slowed while buyers wait for the next generation of Windows and a raft of related products. And even when the new software hits the market in late 2006 and 2007, it is not at all certain that it will give sales the kind of boost needed to get the stock moving,” Snyder writes. “Strong sales of PCs, nearly all of which run Windows and Office, would certainly help. But that won’t happen in the short term. Growth in the worldwide market for PCs is expected to slow to 9% in 2005, down from last year’s faster clip of 11.6%, according to Gartner, a technology research company.”
Snyder writes, “The trouble is, it is taking more and more of an effort to push consumers and businesses into upgrading their hardware and software. Simply put, many people are happy enough with what they have, despite well-publicized security flaws and other problems with the company’s software.”
Synder continues, “[Windows] Longhorn, scheduled for release next year, is likely to be a significant improvement over Windows XP, but it will lack some of the snazziest features originally promised by Microsoft. ‘It will have nice-to-have features, but not must-haves,’ says Martin Reynolds, a vice president and research fellow at Gartner. Moreover, it will take businesses several years to get comfortable with the new operating system. The shift to XP, which has been on the market for almost four years, is not yet complete, he added.”
Read Synder’s full article, “Microsoft Feels Like Lead,” here.
MacDailyNews Take: If “people are happy enough with what they have” then why does Credit Suisse First Boston expect total Mac units shipping in the fiscal second quarter to rise 35% year-over-year, above the research firm’s PC industry growth estimate of 10%? And why, for the last quarter of 2004, did Apple’s Mac shipments grow more than 25 percent, according to IDC, while the PC market as a whole grew at 13.7 percent (even before the debut of the Mac mini)? If Wall Street ever puts two and two together, AAPL shareholders better strap themselves in for blast off, there’ll be no lack of inertia for them.
[UPDATE, 11:13am: fixed headline, changed “inertia” to “momentum.”]
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