NEW YORK – Microsoft stock took a big hit on Friday, after the software giant behind Windows, the Xbox and Surface tablets reported disappointing results for the latest quarter.
The results, which fell below Wall Street’s expectations, included a large write-off for Microsoft Corp.’s surface RT business. A poor reception for Windows 8 contributed to a revenue drop in the company’s operating system software unit.
Microsoft struggled far more than we had expected, said Cowen & Co. analyst Gregg Moskowitz, who downgraded the company’s stock to neutral from buy, and cut his price target to $33 from $38.
The analyst said in a note to investors that he is much less confident that the company can deliver healthy growth in the near future due to 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.
Microsoft’s shares fell $4.04, or 11.4 percent, to $31.40 Friday. Year to date, Microsoft’s shares are up about 18 percent.