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By | Kelly Fiveash 14th December 2010 10:53

Goldman Sachs wants clouds, tablets and divis from Microsoft

Another tough year ahead

Microsoft has another tough year ahead, a Goldman Sachs tech analyst has warned.

Sarah Friar said at the weekend that 2011 would be a big challenge for Steve Ballmer's software company, principally because Microsoft will be attempting to play catch-up with Apple and Google on tablet computers and mobile phones.

The analyst predicted, according to TechFlash, that Microsoft's top-line growth would slow from 12 per cent to seven per cent next year.

"A tablet response is still not forthcoming and our early read on Windows Phone 7 has not yet changed our view that Microsoft's share in mobile OSes will remain at only the single-digit level," said Friar.

"For an unlocking of shareholder value, we continue to look for a more aggressive dividend, a more focused consumer strategy, and stronger Cloud-Azure traction."

Goldman has now set a 12-month price target on the company of $29 per share.

In October, Goldman downgraded Microsoft's stock from "buy" to "neutral". The brokerage said at the time it had lowered the rating in response to the company’s sluggish entry into the tablet and smartphone market.

The brokerage’s concerns reflected those of Microsoft’s own board, which in September put a cap on CEO Ballmer’s bonus payout because of his failure to take on Apple and other rivals in the mobile and “form factor” space.

Goldman said in the autumn that it expected Redmond’s core business to be affected by a longer PC refresh cycle. The sting in the tail being that Microsoft, as Ballmer has recently – finally – acknowledged, can no longer rely on those products alone.

And judging by Friar's most recent note, the brokerage's stance remains unmoved by any recent noises coming out of the Microsoft camp. ®

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