• Forbes, Monday, July 31, 2006 11:45 AM

Microsoft is "lost in transition," according to a new report from Credit Suisse. While fourth-quarter sales were above estimates on strong PC unit shipments and software sales, the company is in the middle of the long-haul process. It's moving away from its sales-centric business toward an ad-supported, service-based one. Although it could take "years," Credit Suisse believes Microsoft's margins won't suffer during the transition. But they aren't expected to grow at all, either. To aid the transition, the software giant has been in the midst of a massive repurchasing program of 800 million shares, worth $20 billion, which is expected to be completed Aug. 17. The CS report said this should add about 6 cents per share. As far as growth opportunities are concerned, the investment firm said to look elsewhere--to pure-play competitors like Red Hat and salesforce.com, and underpriced leaders, such as Google and Yahoo.

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