Shares of Microsoft fell slightly after an analyst, Sarah Friar at the global investment banking and securities firm, Goldman Sachs downgraded the software giant on Monday (October 4, 2010). It appears that Microsoft’s shares has been downgraded from â€œBuyâ€ to a â€œNeutralâ€ rating, with an accompanying drop in the share price from $32 to $28. I’m sure a number of you are probably wondering how this would impact Microsoft’s gaming division, and the prognosis is certainly grim.
Amongst a series of recommendations to help improve investor confidence in Microsoft, Friar recommends:
“A coherent consumer strategy that could involve paring back investments and/or divesting more peripheral assets such as gaming”.
It is seemingly plausible that Microsoft may consider pulling the plug on their gaming division, as pressure mounts for the ailing company to deal with inevitable investor pressure. We should also remember that Microsoft will be anxious to improve their standing with Goldman Sachs, considering that, if we take into account grade inflation, a â€œneutral â€œrating is a kin to a â€œsell ratingâ€ in this economic climate (i.e. the current recession). This is a situation that Microsoft will try to deal with as soon as possible, and investment firms will be watching with ruthless abandon.
This is not great news for gaming, since if Microsoft is forced to abandon their gaming division, it would mean less competition, and gaming in particular will suffer for it.
Last Updated: October 5, 2010