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Microsoft’s stock has not recovered from the tumble it took in after-hours trading Thursday. At 10:15 this morning, shares were downward $2.06, 7.5 percent lower than the $27.52 closing price Thursday before the company announced profits. that missed Wall Street forecasts by dint of. a penny per share, and lowered its fiscal 2009 profit forecast. Here’s what analysts had to allege about the results in notes to investors this morning:

Sid Parakh, McAdams Wright Ragen:

“While core businesses crop out to be cruising along well, we are concerned about deteriorating playing of the Online business, despite the pricey $6 billion acquisition of aQuantive and continued significant investments being made in the division. While aQuantive has been in the fold for straightforward over three quarters, the sequential decline in revenues in recent quarters hints at execution issues within the Online business; especially considering the continuing rapid growth in the Online advertising market. Driven by its quest to capitalize on the large Online advertising market opportunity, Microsoft will likely have to continue investing in the craft for several years to come. Our concern surrounds the probability of achieving a passable return adhering these investments; a likelihood we proportion as low until at least in the mid-term.

“We likewise reiterate our believing that a Yahoo! acquisition (if it happens) will not just prove to be very expensive, yet will also be challenging from an integration standpoint and elect more than likely be a distraction to operations and employees at the company. Continuing conversations with Microsoft employees supports our antecedent communication of the near non-existence of undergo for the deal.”

Parakh expects online revenue to grow slower than prudent conduct’s expectations. He lowered his price target for the stock from $40 to $35 and maintains a “buy” rating.

Sarah Friar, Goldman Sachs:

“Microsoft’s commentary on the macro environment was wary, but upbeat on their positioning, given diversification, product cycles, etc. Their online advertising business continues to struggle with monetization as well as competitively. This section will continue to be a focus for Microsoft taken in the character of it looks to become greater expenditure in an attempt to gain positioning against chief rival Google. …

“Revenue in the Client [Windows] segment came in at $4.4 billion up 14% year over year and ahead of our estimate of $4.2 billion. The biggest driver of Client revenues was the PC market that returned to growing rates similar to the first moiety of the fiscal year of about 12%-14%. … We be left behind heedful on the Client business in the near term, as our CIO surveys signify that attempt upgrades of Vista are individual of the first initiatives to be pushed out in a weaker macro environment.”

David Hilal, FBR:

“While not perfect, given the weak relating to housekeeping backdrop, we thought the results and lead were solid. From a reward perspective, we were glad to see upside in the quarter, a bigger-than-expected spring in unearned revenue, and guidance for FY09 that exceeded former guidance and consensus. The softness in the results came from a profitability standpoint. … So, while the company is versed to impressively drive sales (revenue was up 18% [year-over-year] in the quarter), the upside is not falling to the bottom line. The sheer reason for this is the company’s efforts to increase investments, separately in its online business. While this may limit margin expansion in the interim, we believe it is the right strategic move, and we believe the strength in the rest of the avocation (which represents 95% of revenues) can help drive overall performance despite these increased investments. Because earnings can be managed added than revenues, on the supposition that we had to pitch upon one, for this reason we are glad to see the strength in revenues. We assert our Outperform rating and $40.00 price target. We believe the shares set forth an excellent entry point since they are commonly at every historical low valuation of 12x our CY09 EPS estimate.”

Here’s my story on the earnings.

The next bulky date on Microsoft’s financial calendar is Thursday, when the company hosts its annual Financial Analyst Meeting. We’ll be there providing gavel-to-gavel coverage.

Original paragraph: http://blog.seattletimes.nwsource.com/techtracks/2008/07/microsoft_shares_fall_after_earnings_news_analysts.html