Microsoft shares continue to slide

Shares in the software behemoth fell $2, off three per cent from yesterday's close, and six per cent down on opening Thursday.

Blodget said he cut the firm's share rating from "buy" to "accumulate" because of its reliance on the flagging desktop PC market. He said it will be unlikely for Microsoft to continue growing at above 10 per cent a year.

Currently analysts predict Microsoft will grow at 18 per cent a year over the next few years. However, Blodget estimates the PC market as a whole will grow by only five to seven per cent in the same period, a market nearly all Microsoft's revenues depend on.

In the long term, Blodget sees some revenue growth from server software, increasing due to Microsoft's .NET initiative, and its long-awaited X-box games console.