If fewer people are interested in buying a new personal computer, then fewer investors want to own stakes in companies whose fortunes are tied to the sales of laptop and desktop machines.
That logic ruled Thursday as Wall Street reacted to fresh evidence that PCs are turning into a dying breed of technology as consumers and businesses embrace smartphones and tablet computers as their preferred computing devices.
The stocks of Microsoft and Hewlett-Packard absorbed significant hits on the news that PCs suffered an unprecedented sales decline during the first three months of the year.
Other companies connected to the PC industry, such as Intel, also were affected, although not to the same degree as the industry bellwethers.
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Microsoft’s stock fell $1.35, or 4.4 percent, to close at $28.93, while HP’s shed $1.44, or 6.5 percent, to finish at $20.88. Intel shares decreased 43 cents, or nearly 2 percent, to $21.83.
First-quarter shipments of PCs plummeted by 11 to 14 percent from a year earlier, according to separate estimates issued Wednesday by Gartner and IDC. By either measure, it was the biggest decrease recorded by either research firm since they began tracking PC sales.
Microsoft hoped to revive PC demand last year with the debut of the most dramatic makeover of Windows since the 1995 redesign.
The changes imbued Windows with some of the qualities of mobile software, including touch-screen controls and a display of applications in a mosaic of interactive tiles.
Although Microsoft says it’s happy with the more than 60 million copies of Windows 8 that have been sold since its October release, analysts have been disappointed.
In its report, IDC blamed Windows 8 for accelerating the sales decline by confusing too many people who had become accustomed to using the old operating system.
Another problem: The PCs designed to run on Windows 8 are coming in a befuddling array of styles and are demanding significantly higher prices than older models, at a time when a smartphone sells for as low as $99 and tablet computers go for less than $200.
Count Sterne Agee’s Shaw Wu among the analysts worried about the future of Microsoft and its partners in the PC industry. “We frankly believe (Microsoft’s) strategy of forcing user interface changes that nobody wants has proven to be a disaster,” Wu wrote in a Thursday research note.
Nomura Securities analyst Rick Sherlund also took a dimmer view of Microsoft’s future prospects as he lowered his recommendation on the stock from a “buy” to “neutral.” In a Thursday note, Sherlund asserted that about half of all consumers see little reason to buy a PC or any other device running on Windows.
Stephen Turner, an analyst at Hilliard Lyons, also downgraded Microsoft to neutral from buy. And Heather Bellini, a New York- based analyst at Goldman Sachs, recommended Thursday that investors sell the stock. She downgraded the shares from a neutral rating.
Microsoft may try to lure back consumers by offering less expensive devices.
The company is developing a smaller version of its Surface tablet to compete with similar-sized devices made by Apple, Google and Amazon.com, according to a report in The Wall Street Journal, which cited anonymous people familiar with the matter.
A Surface tablet with a 7-inch screen could hit the market this year, the Journal said. Microsoft declined to comment Thursday.
The downgradings by analysts Turner and Bellini were reported by Bloomberg News