S&P Downgrades Microsoft (MSFT) to Hold

S&P downgraded Microsoft MSFT from Buy to Hold in the Aug.18, edition of the Outlook. Just a few months ago S&P were touting technology stocks. They said that tech stocks tend to do well in the 2nd year of a bull market. Now they think that the slower growth expected in the 2nd half of this year will affect tech and Microsoft. There normally is some seasonality in technology stocks where summer slowdowns are common. Microsoft shares are still trading around the $25 level they were when S&P downgraded them. Here are some quotes from the report: “We are concerned about a slowing global economy and think PC unit sales growth will moderate after rising over 20% in the first half of the year. Inventories of some PC components such as hard disk drives are rising, indicating to us that some PC manufacturers are already seeing weaker demand. Slower economic growth will most likely delay a PC refresh cycle. We cut our Windows operating systems revenue growth forecast to 8.3% from 17% in fiscal 2011 (ending June) and our EPS estimate $0.10 to $2.24. We lowered our target price by $4 to $31, on a lower expected growth and EPS outlook.”