Trouble Ahead for Microsoft Corporation (MSFT)?

Microsoft has its own recent successes, but it hasn’t delivered a product or service that blew away the market and caught on like wildfire. And one of its best successes, the Xbox gaming system, is seeing weakening sales.

In May, Xbox sales declined 23% year over year and 14% compared to April. Microsoft has a dilemma because the new Xbox One and the rival PS4 gaming system made by Sony have similar features, yet the Xbox One sells for $499 and the PS4 sells for $399.

Conclusion

Contrary to popular belief, Microsoft Corporation (NASDAQ:MSFT) isn’t a company that relies on its reputation. It’s constantly looking to grow through innovation and partnerships, which has been the case for decades. Unfortunately, Microsoft still doesn’t have a standout product that has the potential to spread like wildfire. In a bull market, it wouldn’t matter. The stock would continue to appreciate based on the company’s strong fundamentals. But the market is now on shaky ground, which limits the stock’s upside potential and increases its downside risks.

Dan Moskowitz has no position in any stocks mentioned. The Motley Fool recommends Apple and Google. The Motley Fool owns shares of Apple, Google, and Microsoft. Dan is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Trouble Ahead for Microsoft? originally appeared on Fool.com and is written by Dan Moskowitz.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.