Microsoft tanks 10 percent, hit by 4 downgrades on earnings

SAN FRANCISCO (AP) — Microsoft shares plunged more than 10 percent today after the software giant reported quarterly revenue that beat expectations but warned that a weak PC market and a strong dollar will curb growth this year.

Many analysts slashed price targets on the stock and some cut their Buy ratings to Hold.

Microsoft showed promising signs of growth in new businesses, such as cloud computing, but Chief Financial Officer Amy Hood forecast revenue for the current period that missed analysts' expectations. Revenue for the quarter ending in March will be $21 billion if the company hits the midpoint of its own forecast. Analysts had forecast $23.8 billion, on average.

"The cloud transition remains on track, but lower numbers means a lower price target," analyst Ross MacMillan of RBC Capital Markets wrote to clients.

Last year Microsoft stopped supporting its Windows XP software. That drove many consumers and businesses to upgrade their computers, giving a big boost to sales of newer Windows software.

It seems that 'end-of-XP' jolt is over. Microsoft said Windows licensing revenue fell 13 percent in the December quarter, now that most businesses have finished replacing their old XP computers.