Why You Shouldn’t Write-Off Microsoft: Analyst
Microsoft reported itsfirst quarterly lossas a public company on Thursday, after absorbing a multibillion write-down from a failed investment made in its online unit.
But that's no reason to write the company off, says Edward Maguire, an analyst for Credit Agricole Securities.
In the face of stagnant PC sales, Microsoft did post a 4 percent rise in sales for the quarter. This, Maguire told CNBC’s “Squawk Box,”is one reason to re-assess the software giant.
“What we’re seeing in their quarter are a lot of long-term contracts from chief information officers, which are not about to go away anytime soon,” said Maguire.
This argument may be a hard sell for investors who’ve seen the stock price stagnate around the $30 level. It hasn’t much exceeded that level in over a decade.
But Maguire insists that the company will restore its credibility with a series of new products.
“Windows 8 isthe big release most people know about, but we’ve got a new version of Office and a whole bunch of new cloud-based offerings,” he said. “It’s all coming together now.”
Alongside Windows 8and its new “Surface tablet” — a hybrid tablet and keyboard designed to challenge Apple’s all-conquering iPad — Microsoft is set to release a new web-oriented version of its Office suite of applications over the next 12 months.
“Microsoft is a stealth gorilla in business, and now has the ability to incorporate tablets and mobile into an experience that can be managed with a central IT manager,” said Maguire.
That said, Maguire acknowledges that for the share price to really jump, more people will need to buy into Windows 8 — an uncertain outcome.
Meanwhile, skeptics have declared Microsoft has “lost its mojo,” as Apple and Google corner the market in “cool” devices.
“I think they have acknowledged that they can’t dominate the world anymore,” Maguire said, while arguing Microsoft’s future profitability may be cool enough.
—By CNBC.com’s Jennifer Leigh Parker
CNBC Data Pages:
- Dow 30 Stocks—In Real Time
- Oil, Gold, Natural Gas Prices Now
- Where’s the US Dollar Today?
- Track Treasury Prices Here
Disclosure information for Edward Maguire was not available. Credit Agricole Securities could not be reached.
Follow Jennifer Leigh Parker on Twitter @jparker741.