Investment banking firm Goldman Sachs has labelled Microsoft's stock as "neutral", due to the company's uncertain position in the smartphone and tablet PC market.
The brokerage firm downgraded Microsoft from "buy" to "neutral" from its Americas Buy List, citing a longer PC refresh cycle and absence from the tablet market as its reasons to do so.
Goldman Sachs said that investor interest in Microsoft's Windows and Office business lines will not improve until Microsoft manages to create a niche for itself in the smartphone and tablet PC market.
It also predicted that Microsoft will not be able to perform well in the smartphone market, even as the company prepares to release the first Windows Phone 7-based smartphones in October.
Goldman Sachs suggested that this would be because of the dominant market position enjoyed by Apple and Google's Android OS.
After the Goldman Sachs announcement, Microsoft's share price dropped by 1.6 per cent to end up at $23.98.
Microsoft has sent out official invitations for its 11 October event in New York, which will see the launch of HTC's first Windows Phone 7 device. The device will be offered by US wireless carrier AT&T in the US.