Analysts positive on Microsoft despite first quarterly loss

Fri Jul 20, 2012 7:50am EDT

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(Reuters) - Wall Street analysts stayed positive on Microsoft Corp after the company posted its first quarterly loss as a public company, focusing on impending product launches.

The world's largest software company posted a fourth-quarter loss but beat analysts' estimates, excluding an expected multibillion-dollar write-down and factoring in some deferred Windows revenue.

"Over recent years, Microsoft has demonstrated that it can manage its operations appropriately and this quarter was a good example of that," J.P. Morgan Securities analysts wrote in a note to clients.

Analysts also lauded the strong growth in Microsoft's enterprise business, noting that its Server and Tools (S&T)business and Microsoft Business Division (MBD) remained resilient.

"Microsoft's enterprise results remain extremely impressive - and guidance for the MBD and S&T business points to a solid outlook for the enterprise businesses in fiscal year 2013," Evercore Partners said, raising its target price on the stock to $33 from $32.

Still, analysts expect the company will have to invest heavily to regain share in the tablet, search and smartphone markets from mobile and internet trailblazers Apple Inc and Google Inc.

Citi Investment Research analysts said the new, touch-friendly Windows 8 operating system will likely place the company in a meaningfully better position and expects the PC market to reflect this.

With the upcoming launch of Microsoft's new Windows 8 system in October, and an accompanying tablet of its own design, investors are hopeful that the company can regain its stature as a tech leader.

According to Thomson Reuters' StarMine, 14 analysts rate the stock "strong buy," 11 rate it "buy," 10 have a "hold," and 1 rate it "strong sell." The mean price target on the stock is $35.63.

Microsoft shares rose 2 percent in premarket trading on Friday. They closed at $30.67 on Nasdaq on Thursday.

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