Microsoft falls in premarket trading on lackluster 3Q forecast, struggling Windows business

MarketsAssociated Press

Microsoft's stock declined more than 7 percent in premarket trading Tuesday after the company provided a lackluster third-quarter forecast. It's also dealing with difficulties facing it Windows software business.

Microsoft Chief Financial Officer Amy Hood told industry analysts late Tuesday that the strong dollar will dent quarterly revenue by 4 percent.

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Yet John DiFucci, an analyst with Jefferies & Co., says that only a portion of the third-quarter guidance shortfall is due to currency headwinds. He said there are "fundamental business issues," some of which will extend beyond the third quarter.

DiFucci lowered Microsoft's price target to $38 from $40, but did not change his rating.

Another concern for Microsoft is its Windows software. While Microsoft has shifted its business toward mobile, it still relies heavily on selling Windows software for PCs. That flagship business is struggling with global shipments of personal computers falling for the last ten quarters in a row, according to research firm IDC.

Shares of Microsoft Corp. fell $3.49 to $43.52 before the markets opened.