PC Market Weakness is Bad News for Microsoft

+5.31%
Upside
398
Market
419
Trefis
MSFT: Microsoft logo
MSFT
Microsoft

According to a recent report from IDC, global PC shipments declined 3.2% during Q1 2011 compared to the same period last year. Growth came in lower than expected vs. the initial 1.5% growth forecast from IDC. [1] Microsoft’s (NASDAQ:MSFT) business is highly dependent on PC sales as Windows OS and Microsoft Office for PCs respectively account for about 40% and 36% of our $31.64 price estimate for Microsoft stock. Our price estimate is roughly 25% above market price. Microsoft is the dominant player in the PC operating system market and competes with Apple (NASDAQ:AAPL) Mac OS and open source software companies like Red Hat and Novell.

Although this report is only for Q1, if this weakness persists in the coming quarters, there could be a downside to our estimate for Microsoft stock.

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See our complete analysis of Microsoft stock.

Notes:
  1. IDC: Global PC  shipments report, 13th April 2011 []