Goldman Sachs Group Inc. analysts cut Microsoft Corp. shares to “neutral,” citing the world’s largest software company’s struggles to gain market share in mobile devices.
Microsoft was removed from the bank’s Americas Buy List, with a price target of $28 rather than $32, Goldman Sachs analysts including Sarah Friar wrote in a note to clients. The company needs to win “a firmer foothold in the growing migration to mobile devices” in order to improve investor sentiment, they wrote.
Microsoft has struggled to match mobile offerings from rivals including Apple Inc. and Google Inc., whose Android software powers high-end phones and tablet computers. Redmond, Washington-based Microsoft has yet to release a tablet computer to compete with Apple’s iPad, 3 million of which were sold in the first 80 days of its release.
A rebound by Microsoft is unlikely this year since “Apple’s iPad and iPhone plus Google’s Android operating system are well established,” the Goldman analysts wrote.
The company may also be held back by corporate clients replacing computers more slowly because of budget pressures, and “cannibalization” of laptop computer sales in favour of tablets, they said.
Microsoft shares have lost more than 20 percent of their value this year, closing 0.5 percent lower at $24.38 on Oct. 1.
Microsoft is promising a suite of new products aimed at gaining ground in the mobile market. Smartphones running the company’s revamped Windows Phone 7 operating system will go on sale later this year, and Chief Executive Officer Steve Ballmer has also promised tablet computers.
In June Microsoft scrapped its Kin smartphone after less than two months on the market.
Windows Phone 7 will initially run on devices from manufacturers including HTC Corp., the company has said.
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