Microsoft unveils Windows 8, Surface tablet

NEW YORK, Thu Oct 25, 2012 – Microsoft Corp. launched its new Windows 8 operating system and Surface tablet on Thursday in a bid to revive interest in its flagship product and regain ground lost to Apple Inc. and Google Inc. in mobile computing.

“We’ve reimagined Windows and we’ve reimagined the whole PC industry,” Microsoft Chief Executive Steve Ballmer told Reuters Television early Thursday ahead of the launch.

Windows 8 devices and the company’s new Surface tablet, which aims to challenge Apple’s popular iPad head on, go on sale at midnight on Thursday.

Steven Sinofsky, head of Microsoft’s Windows unit and the driving force behind Windows 8, opened the launch event in New York in front about 1,000 media and PC industry partners.

He showed off Windows 8’s new look, but stressed that the system was built upon the base of Windows 7, Microsoft’s best-selling software that recently passed 670 million license sales.

The new design of Windows, which dispenses with the Start button and features square tiles for apps, may surprise some users. Initial demand appeared solid, but customers were wary.

Barclays cuts Microsoft price target, others await Windows 8 launch

SEATTLE, Wash., Fri Oct 19, 2012 – Barclays Capital cut its price target on Microsoft Inc.’s stock after the world’s largest software company reported a greater-than-expected dip in its quarterly profit.

However, most brokerages maintained their ratings and price targets on the stock ahead of next week’s Windows 8 launch, described by Credit Agricole Securities as the most comprehensive product refresh cycle in Microsoft’s history.

Microsoft reported a 22 percent drop in profit on Thursday due to a fall in sales of computers running the Windows operating system in a weak PC market.

First-quarter sales fell 8 percent to $16.01 billion and some revenue was deferred ahead of upcoming releases of its core Windows and Office products.

Shares of the company, which closed at $29.49 on Thursday on the Nasdaq, were set to open 2 percent lower on Friday.

While the weakness in the Windows business was expected, the poor showing by the Office business and the server and tools division was a surprise, Barclays analyst Raimo Lenschow.

Lenschow lowered his price target on the stock to $34 from $36, but maintained his “equal weight” rating.

“… We still prefer to wait on the sidelines until after the Windows 8 launch next week,” he said in a note.

Microsoft’s next Steve: Windows boss faces biggest test

SEATTLE – For Steven Sinofsky, the stern but creative engineering manager who runs Microsoft Corp’s flagship Windows division, Feb. 29 is showtime.

On that day, in Barcelona, Sinofsky will preside over the public test release of the Windows 8 operating system, the most important new version of Microsoft’s cornerstone product in a decade. Optimized for touch computing and low-power microprocessors, Windows 8 will run on tablets as well as desktops and laptops – and maybe even on phones in the future.

If it takes off, it could extend one of the most lucrative franchises in business history and restore some cachet to the fading Microsoft brand.

It could also propel Sinofsky to the top job at the company when CEO Steve Ballmer eventually steps down.

Frank Artale, managing director at Seattle-based venture capital firm Ignition, which was founded by a group of former Microsoft executives, said Sinofsky has both “the tech chops” and the “panache and showmanship” needed for the job.

Supporters credit Sinofsky with bringing order to the sometimes-chaotic software development process at Microsoft – partly by cutting layers of management through what is now referred to internally as “Sinofskyization” – and getting products out the door.

Critics say he lacks the necessary charisma for the top job, and question whether he has the technical brilliance of Gates or the incisive analytical ability and forceful personality of Ballmer.

Most agree, though, that a strong performance for Windows 8 would all but make him the heir apparent.

Microsoft declined to make Sinofsky available for interview.

Soft PC sales likely to hold back Microsoft profit

SEATTLE ― Microsoft Corp looks set to report flat or lower demand for its flagship Windows product on Thursday, a victim of limp personal computer sales, casting a shadow over otherwise strong earnings in a troubled global economy.

The world’s largest software maker generally meets or beats Wall Street’s profit forecasts — as it has for the last nine quarters — but investors tend to focus on Windows sales, which have dropped for the last three quarters when compared to year-ago figures.

In each of those three quarters, Microsoft shares have drifted lower in the days or weeks following earnings.

“It’s a seasonally soft quarter for them,” said Kim Forrest, senior analyst at Fort Pitt Capital Group, which holds Microsoft shares. “I want to hear comments on what will happen to the PC market. I expect little or no growth from the consumer. I just want to know that companies are still spending.”

Global PC sales rose only 3.2 percent last quarter, according to research firm Gartner, propped up by emerging markets such as China. In the United States and Europe, consumers are reluctant to buy new PCs, or are lining up to buy Apple Inc’s. iPad instead.

Microsoft is shielded from the consumer slowdown partly because its core corporate customers are still spending money on new technology.

Strong results and a buoyant outlook from chipmaker Intel Corp. on Tuesday also suggest that PC demand is not as weak as some fear.

The fact that PC sales are slow — especially in the United States and Europe — is no secret. The question is how much investors have already factored that into Microsoft’s performance.

The company’s shares are up 7 percent from 12 months ago, slightly ahead of the Nasdaq composite index’s gain, closing at $27.13 on Wednesday. But the stock is still stuck in the $20-$30 range, as it has been for most of the past 10 years.

Wall Street expects Microsoft to report a profit of 68 cents per share for its first quarter of fiscal 2012, up from 62 cents a year ago. Analysts are looking for sales to rise 6 percent to $17.2 billion.

The sales increase is likely to come from the unit which sells Microsoft’s Office suite of applications — now the company’s biggest-selling product — and the entertainment and devices unit, which makes the popular Xbox game console and Kinect hands-free game system.

Its server and tools unit — which sells server software that powers data centers and “cloud computing” infrastructure — is also growing strongly.

The black spot on Microsoft’s report card is always its online services unit — which includes the MSN portal and Bing search engine — which has lost more than $8 billion in five years and shows no sign of stopping the bleeding, as Microsoft invests heavily to catch up with market leader Google Inc.

Aside from hints on the state of the PC market, investors will be listening for Microsoft’s plans to integrate Skype into its products, after its $8.5 billion deal to buy the online chat service closed last week.

Any word on other possible deals would be eagerly received. Last month Reuters reported Microsoft might be looking at a second attempt to buy ailing Internet giant Yahoo Inc.

Microsoft is also likely to detail plans for its latest assault on the smartphone market soon. The first phones from its partnership with Nokia are expected on the market in the next two months.

On top of that, investors will welcome any news on the development of Windows 8 — the code name for its new operating system — which is set to hit the market next year and will represent Microsoft’s charge into the tablet market.