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Friday, October 13, 2006

Microsoft Held Back by S&P Downgrade

Microsoft was enjoying a nice up-day after confirming its dates for Windows Vista, but then Standard & Poors issued a downgrade. They downgraded their Stock rating from a Strong Buy to a Hold rating because it was up 33% since the June 13 lows and close enough to their $31.00 price target to merit a downgrade.

Microsoft made changes to the actual operating system to comply with Korean and European demands, and they will not have to delay the release of Windows Vista.

Oddly enough on CNBC the analyst for S&P said something about Microsoft no longer having a near-monopoly on video game consoles with Xbox 360 in another month after Nintendo's Wii and Sony's PS3 hit shelves. That is strange that they noted that because to date Xbox has not been a net-net profit, so for a debt rating that might actually be good.

Standard & Poors is more of a bond rating firm as far as the street is concerned and the street does not perceive a conflict of interest with an S&P like they do other commission oriented broker dealers. Shares had been up well over 1% at a high of $28.69, but have come off the highs down to $28.39 on the day. We'll have to see if they called the top or not at S&P, because the street isn't ready to say the rally there in big technology leaders is totally over.

Jon C. Ogg
October 13, 2006
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