Microsoft Takes A Royal Beating and Drops 11 Percent
Shares of Microsoft tumbled more than 11% Friday, the stock’s biggest single-day loss in about five years, as investors gave a thumbs-down to the company’s heavy spending plans. In recent trading, shares were off $3 to $24.25 with more than 450 million shares trading hands, seven times average volume. Shares are currently down -$3.17 (-11.63%)trading at $24.08 nearing the closing bell. Looks like Microsoft followers fear $2 billion of spending will be eaten by a ‘black hole.’
Goldman Sachs analyst Rick Sherlund, for example, wrote a number of notes supporting the stock in the last year, consistently making the point that the new product cycle, seen as the company strongest in years, would lead to a breakout of Microsoft’s stagnant stock. But on Thursday, Microsoft told investors that it is going to accelerate spending by some $2 billion in fiscal 2007 — and live with the resulting decrease in margins and earnings per share.
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