Microsoft: Citing Worries On Windows, Argus Says “Sell”

[onehandle]

Source: Barron's

According to Thomson/First Call, there are 33 sell-side analysts with ratings on Microsoft (MSFT). They count 13 Strong Buys, 10 Buys, 10 Holds and zero Sells or Strong Sells. But that information is a bit out of date: this morning, Argus Research analyst Jackson Turner cut his rating on the stock to Sell from Buy.

Turner may not be the best known analyst on Microsoft, but he certainly is now the most bearish - and one of the boldest.

Turner contends EPS for the fiscal fourth quarter ended June, which is due next week, will come up short of Street expectations: he sees 33 cents, while the Street is at 36 cents. That puts his FY 2009 EPS estimate at $1.66, below the Street at $1.70. Moreover, his forecast for FY 2010 is for $1.64, well off the Street at $1.83.

The much lower number for the June 2010 year reflects his view that adoption of Windows 7 will be slower than the Street expects. Moreover, he thinks MSFT is going to see its market share in the operating system segment gradually eroded by simpler offerings from rivals - for instance, Google (GOOG) Chrome OS.

Read more: http://blogs.barrons.com/techtraderdaily/2009/07/16/microsoft-citing-worries-on-windows-argus-says-sell/

[merwin]

1. Um... Windows 7 is MS's gem so far.

I see a massive amount of people jumping ship from Vista to Windows 7 before it's even released. My whole family and most of the office I'm at have gone to it.

I haven't personally heard a single person who has used it that didn't think it was simply amazing.

But go ahead and sell if you think it's going to flop :)

[Delphinus]

3. I'm still on XP - didn't even *want*

to try Vista after all the horror stories I heard.

Heck, I don't even want to download IE 8!

[merwin]

9. Smart move... The only real benefit to Vista was for corporate customers.

Easier systems management for IT, but required a big hardware investment to run well.

Windows 7, however, will run on pretty much anything XP will run on. Microsoft actually reduced the system requirements for it. Basically, it's what Vista should have been. However, I can't really fault them for Vista, since it was a stepping stone in the process, and a huge change in the OS.

Apple does the same thing. First revision of OS X sucked. Second one got better. Leopard (OS X 10.5) isn't that great, but Snow Leopard (OS X 10.6) that's coming out shortly resolves the issues.

As much as you beta test a product, even with public betas, you won't REALLY how it's going to work out until it actually ships in mass production.

This time around, MS has been "leaking" a new build of Windows 7 every couple of weeks. In my opinion, it's the greatest move they ever made.

[Occulus]

15. Here's the funny thing about Windows 7, though

It runs better than Vi$ta ever did even as a beta.

I've been running a beta build of Windows 7 for some time now. I'm dual-booting a machine that also has XP on it. I haven't even booted into XP in, well, weeks. 7 is just that good.

I've experienced something like a 50% performance increase in my games- The Last Remnant, Prototype, Sims 3, and others all run significantly faster than they ever did on XP. Since games push a machine a whole lot more than any of the major software applications on the market, it's safe to say that 7 is a solid, dependable OS (oh by the way, I've yet to crash the OS, and that nirvana is never the case with a Micro$oft OS).

You can grab a free product key for 7 from the Microsoft website; the release candidate will function through March of 2010, at which point it shuts down every couple hours until sometime after that, when it goes down for good. As I understand things, you'll be able to buy a "family pack" version for up to three PCs in the same household, and at a lesser price for them than a single copy of Vi$ta ever sold for.

I think Windows 7 is going to be one of those rare gems from Microsoft that comes out about every other major OD redesign. I'm definitely getting it- it's just that good.

[merwin]

18. It's the only beta OS I've ever installed willingly on a client's PC.

Even in beta it was as stable or more so than XP/Vista, with higher performance. In fact, I just loaded it on my brother's crappy Gateway Core Duo 1.6GHz laptop with 1GB of RAM so he could use Photoshop CS4 on it... replacing Vista Home Premium that was on there. Photoshop actually runs, and at a decent clip. I did add a SD card for ReadyBoost, which is probably helping out a lot.

As for crashes, I've only had ones caused by third party drivers.... (read: NVIDIA). Not nearly as many issues with my ATI cards.

It's funny... XP was officially declared a piece of crap until SP2 came out, at which point it was declared a TOTAL piece of crap, as the extra security features in SP2 broke apps like Photoshop, and developers didn't get their act together and release compliant versions in time. It was a while after XP SP2 came out that it became the XP that we see today. In reality, SP2 could have very well been a new OS release itself. If this were the old DOS days, it would have been... remember MS-DOS 6.22? :)

[CatholicEdHead]

20. I expect a slower 7 adoption rate among businesses

Because of old software many refuse to update. I see a corporate pushout 2-3yrs out max when 7 has proved itself and SP1 comes out. XP Mode will make or break it in the sometimes archaric corporate PC world.

[merwin]

22. I see it as the opposite. A shitload of businesses skipped over Vista...,

If they skip over Windows 7 they risk losing their migration path. XP mode will work great for most line of business apps, unless they require some extra hardware to run, but most of them are just CRM solutions of some sort.

The thing I wonder about is if you can take that VHD image of XP mode and convert it to use under VMware or VirtualBox, which are far more feature-rich in terms of compatibility options with passing hardware through.

Windows 7 has been proving itself as being solid for the last 6 months of public beta's/RC's. I have yet to meet someone who's actually installed and used Windows 7 who doesn't think it's 10x better than Vista, and it hasn't been released yet. That's saying a lot.

Plus, for home users the whole Homegroup thing is a godsend. So easy even my parents could use it :)

[CatholicEdHead]

23. Waiting until 7 SP1 is not loosing the migration path

As good as the Beta/RCs are, many will wait 1-3yrs for the normal turnover cycle to turn over machines they want to turn over (P4 HT and early Dual Cores do not have it). It will be a gradual process, only newer machines will have the Intel or AMD chip with hardware visualization to run XP Mode. XP Mode will have to contend with 16bit and maybe even old 8 bit custom software in many workplaces. Compatibility will be a major issue in some places.

Like it or not, there will also have to be some training budget with the GUI changes between 7 and XP. Many businesses do not have that ability in this tight economy.

[merwin]

24. There are no 8 bit apps in MS world.

Been 16 bit since DOS. In any case, you can make Windows 7 operate like XP with a few settings changes.

You are right about the XP mode requiring virtualization, but I see that as something mid-size to large companies will use, not small business... and they stick pretty closely to the 3 year replacement schedules usually. that would mean that 2/3 of large companies would have systems that are compatible.

In any case, I certainly won't hesitate to sell Win7 the day it comes out, provided their software works.

[Deja Q]

11. Every time a new MS is announced, there's media hype, including the obligatory

"This will make or break microsoft".

That was old, even when they said it for Windows 2000...

Or XP, which had MS execs bleating how "It is how Windows 2000 should have been"...

ad nauseum.

Anybody buying the upgrade version, have fun... the next time you have to reinstall, oh and you will, you'll need your previous OS &**RE-ACTIVATED**&... even in 2006 I fathomed a better way for Windows OS DRM and since then they've only worsened it. (And, no, I'm not going to give any free hints - they use their customers as beta testers anyway... my time is worth money. I'm not a MS whore.)

[merwin]

16. Wow, you're taking this really personally.

I don't believe I ever said that it would make or break Microsoft. It will go a long way toward mending the bad blood regarding Vista. Vista wasn't MS's best OS. In fact, it was a step backwards for home users, and they lost customers because of it. Businesses had a hard time going to it because many of the Line of Business software that they use wasn't Vista compatible (read: poor programming like hacks that took advantage of some of the insecurities of XP). Windows 7 resolves damn near every complaint about Vista. And on top of it all, you can load it on pretty much any PC XP will run on.

I'm not sure where you're going with the "they use their customers as beta testers anyway". Yes, they do. Windows 7 was released multiple times to the world to test it and give feedback.

Also not sure what you mean by "Windows OS DRM". The OS doesn't have any DRM. It has product activation. I guess Windows Media Player has DRM, but that's not part of the OS (just bundled with it). And the product activation can be easily circumvented by using an OEM BIOS loader to fake Windows into thinking you're an OEM customer and therefore does not need to do product activation. Or you could use the "student edition" version of XP which requires no modification and will install on any PC.

PS- I don't recall anyone asking for free hints. Besides, all of them various ways of getting around the product activation are freely available with a simple google search... unless you came up with one that nobody else has found yet. And the "my time is worth money. I'm not a MS whore." part... WTF? Anyone who throws that kind of a line out unsolicited immediately loses pretty much all credibility in my book, as that whole paragraph is talking about the retail versions of Windows. If you're spouting off the "my time is worth money" bullshit, you'd better be in high demand working for high end clients, at which point you wouldn't be buying upgrade versions... that's what volume licensing is for. Hassle free activation and a single license key for the entire organization. And as far as "I'm not aa MS whore"... clearly. You're obviously a whore for some other operating system.

But feel free to bash MS as much as you want. I'm only a whore from 8am to 5pm Monday through Friday, during which time I manage several unix/linux/esx/windows/mac clients and servers. Not everyone who praises a Microsoft product is a whore. Sometimes they deserve a little credit. How about trying out Windows 7 for yourself before going all FOX News and reading off of the MS-basher Talking Points memo. Or not. Doesn't matter to me at all.

[Matariki]

21. Hey - I'm waiting for that to come out before getting a new computer

I heard it's good. How did you get your copies?

[Devils0wn]

2. We should all buy Macs

Apple needs the sales.

Apple drops to 5th in US computer sales
http://legacy.macnn.com/articles/09/07/15/idc.prelim.q2.2009/

Apple has sunk a full position in the US computer market during the spring, according to early estimates by IDC. The Mac producer is expected to have dropped from fourth place in the winter to fifth in the spring as it should have shipped 12.4 percent fewer computers than it did a year earlier, falling to 1.21 million Macs. Its market share is poised to remain the same at 7.6 percent but will have been eclipsed by Toshiba, which could jump over a full percentage point to ship 7.7 percent of PCs in the US.

Of the top five, the only other firm to lose market share is predicted to be Dell. If accurate, Dell would still have the lead with 26.3 percent of the market but will have shipped 18.9 percent fewer PCs than it did in spring 2008 and would have shipped just 40,000 more computers than HP at 4.17 million. HP's deliveries are still anticipated as being near flat at 2.3 percent growth from year to year, though the lack of change was enough for Dell to at least temporarily regain a lead it had lost in winter of this year.

Acer will have grown the quickest under these estimates, jumping exactly 51 percent to reach nearly 2.01 million PCs shipped and 12.6 percent of the American market.

[Gman]

4. The obligatory "get a Mac" post

[Commie Pinko Dirtbag]

6. I think you misunderstand the gist of that post. -nt

[Commie Pinko Dirtbag]

7. You AGAIN? -nt

[Deja Q]

12. I did. I have Microsoft to thank. Big-time. Best move I sincerely ever made.

[robcon]

5. The 22 to 1 (buy or strong-buy vs. sell ratings) gives it away.

MSFT is a favorite of the analysts, with one contrarian (good for him) - which makes a market.

[Commie Pinko Dirtbag]

8. Kick so people can see WHO is surreptitiously back.

No fixed residence indeed.

[NJGeek]

10. MSFT is late to the game in cloud computing.

The future of computing. MSFT is too late. They are done.

[Deja Q]

13. Only if they can't get azure and their other cloudy cloud initiatives to work...

If businesses have even 1/10th the intellect they claim, they wouldn't continue supporting those crooks. (How much of MS's history of vaporware and bait'n'switch do people need to see and still won't be believed by anyway...)

All I know is, some people like the ideas MS sells... pity MS can't seem to get them to actually WORK and the problems have only been getting worse. People are fed up and the 50-somethings, the ****heads, will be retiring so they don't care.

It's like they're incontinent, except it's about the job and not being a hundred years old...

[merwin]

17. Apple has had their fair share of vaporware and nasty tactics themselves.

First off, Copland...
http://en.wikipedia.org/wiki/Copland_(operating_system)

Enough said about that one. In my opinion, the only reason you don't see vaporware coming from Apple is because they keep everything a secret until the last minute, which I guess adds to the suspense. Microsoft is the exact opposite. Damn near every development team has a blog, they release a crapload of proof-of-concept and random utilities at http://research.microsoft.com

And the biggest of Apple's nasty tactics, iPod. You complain about MS's DRM. How about a $300 media player that only supports Apple's own codecs and WAV/MP3/MP4. Note the convenient lack of any open source container formats, such as MKV or OGG, which could have been easily added. Technically you've got WAV, but that's just uncompressed audio, so there's not much to license there :)

That is how Apple does DRM. They sell you a product and make it compatible with only their other products, locking you into iPod+iTunes+iTunes Store.

On this front, Microsoft is just as guilty as Apple. I've had a Zune sitting around that I won a year or so ago because I can't use my choice of software to manage it. It's locked into the Zune software.

"If businesses have even 1/10th the intellect they claim, they wouldn't continue supporting those crooks."
What exactly are they misrepresenting? How are they crooks? What bait and switch are you referring to? How have they screwed businesses over?

[NJGeek]

...oops please delete

[NJGeek]

19. who cares about apple?

its not apple that's going to put a stake into MSFT - its the Google, Amazon, and the rest of the Internet.

I know for a fact this is what MSFT is afraid of internally. azure, office online, etc are all direct responses to this threat. i'm afraid its too little, too late.

[alfredo]

14. Analyst: Microsoft "misjudged" iPhone, Google

http://www.electronista.com/articles/09/07/16/analyst.says.sell.ms.stock

Analyst: Microsoft "misjudged" iPhone, Google

In a rare move, Argus Research analyst Jackson Turner today reversed his recommendations and urged investors to sell Microsoft stock. He cautions that the market has "shrugged off" real threats to its operating system business and that neither investors nor Microsoft have fully realized that the iPhone, as well as Google platforms like Android and Chrome OS, are shrinking Microsoft's influence. Some effects may not be felt until later in 2010, when Chrome OS is released, but Microsoft now faces a slow "ebbing tide" over the next few years as it loses share.