In a rare move, Argus Research analyst Jackson Turner today reversed his recommendations and urged investors to sell Microsoft stock. He cautions that the market has “shrugged off” real threats to its operating system business and that neither investors nor Microsoft have fully realized that the iPhone, as well as Google platforms like Android and Chrome OS, are shrinking Microsoft’s influence. Some effects may not be felt until later in 2010, when Chrome OS is released, but Microsoft now faces a slow “ebbing tide” over the next few years as it loses share.
“We believe Microsoft has misjudged — or more judiciously, has been unable to react swiftly to — the shift towards simpler operating systems on cheaper, more portable devices, including cell phones, smart phones and netbooks,” Turner said.
Put simply, Microsoft got cocky with its 90 plus percent Windows market share, got lazy, failed to innovate, and has essentially been playing catch up in every single other market it competes in. From the Zune to Windows Mobile, and more recently, Microsoft’s newly announced efforts to set up Microsoft branded retail stores, the good folks over in Redmond always seem to be straggling a few years behind the curve. Unfortunately for its investors, this stagnancy has been apparent in Microsoft’s stock price for quite some time now.
2 years ago, Microsoft was trading at $30 a share. Since then, the highest its traded at has been $37 a share which it reached in November 2007. Interestingly, over the past 5 years, Microsoft’s stock price has consistently remained within a 10 point price range – not exactly the type of performance you expect out of a big blue chip like MSFT.