Pacific Crest’s Brendan Barnicle this morning reiterates a Sector Perform rating on shares of Microsoft (MSFT), after cutting estimates for sales of Windows this quarter because of changes to Microsoft’s upgrade policy for the operating system.
In response to Microsoft’s announcement last week that it would offer coupons for those buying a PC now to upgrade to the next version of Windows, “Windows 8,” at a discount, Barnicle notes there was no option for upgrading to Windows “Home” edition.
That means buyers who would want the cheaper hardware that doesn’t run Windows “Pro” may hold off on buying a PC in the fiscal Q4 for Microsoft that runs through this month.
Writes Barnicle, “there is no option to upgrade to Window 8 Home. Window 8 has three primary SKUs: Windows 8 Home, Windows 8 Pro and Windows 8 RT (which is for ARM processors). Consumers who are looking for a low-end PC, like a Windows 8 Home model, will not have an upgrade option.”
He adds, “In addition to the stall ahead of Windows 8, more data from the PC supply chain indicate that PC sales are slowing.”
Barnicle cut his growth estimate from 7% to 4% this quarter. He now projects $18.5 billion in revenue for Microsoft this quarter, and 65 cents EPS. That is about in line with Street consensus.
Barnicle also cut his assumption this quarter for Microsoft’s “Server & Tools” business revenue from 16% growth to just 14%, asserting that Intel‘s (INTC) recently released “Romley” server chip is not turning out to be a “major catalyst,” according to Pac Crest’s survey of corporate CIOs.
Microsoft shares today are off 4 cents at $28.41.
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