Microsoft shares hit by downgrade

Shares in Microsoft fell nearly 2% during US trading, after Goldman Sachs cut its rating of the computer giant.

The investment bank cut its rating of Microsoft shares from "buy" to "neutral".

It said Microsoft was being threatened by the rise of tablet computers such as Apple's iPad, which do not run Windows software.

It also expressed concern over the slow recovery in PC sales.

Shares in Microsoft have already fallen 23% since April this year, with analysts concerned that the computer giant is failing to assert itself in the growing smart phone and tablet computer markets.

The company needs to find "a firmer foothold in the growing migration to mobile devices", Goldman Sachs analysts said in a note to clients.

They also said that Microsoft was unlikely to make significant progress this year, with Apple's iPhone and iPad and Google's Android operating software already well established.

Microsoft's chief executive Steve Ballmer has previously promised to produce a tablet computer in the future.

Smart phones running the company's Window Phone 7 software are also due to go on sale later this year.

More on this story

Related Internet links

The BBC is not responsible for the content of external Internet sites