Microsoft facing tough times for 2009?

Logo MicrosoftMicrosoft may be facing harder times than expected going into 2009, various analysts argue. Although the company itself has posted conservative guidance for the near future, Morgan Stanley analyst Adam Holt says he is lowering both his fiscal Q2 and fiscal 2009 projections, mainly on the belief that PC sales have slackened considerably. Complicating the situation, according to Bernstein's Jeffrey Lindsay, is that the emergence of netbooks represents a wildcard -- because of their limited purpose many of them are able to use Linux, or lower-end versions of Windows.

A similar problem exists in the enterprise world, where corporations may be tempted to switch to SaaS (Software as a Service) subscriptions, instead of making occasional payments for upgrades to software like Office or Exchange. Lindsay notes, however, that Microsoft is unlikely to be threatened in this area by cloud computing, espoused by companies such as Google. A hybrid approach is believed to be more likely for the market.

Benchmark's Brent Williams suggests that a more serious threat comes from diminishing IT budgets, which may lead companies to delay renewing licenses. His FY09 EPS estimate has dropped 6 cents to $1.99, and revenue for the year is expected to be $64.6 billion, $850 million less than previously predicted. These figures are generally on par with consensus, although in the latter case revenue has been pegged at $64.7 billion.

Holt is more pessimistic, pegging FY09 EPS at $1.84, and revenue at $62.2 billion.

Source: electronista

Tags: Linux, Microsoft, netbooks, Windows XP

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