Credit: Microsoft

Microsoft Corp. shares took a beating today after Goldman Sachs issued a sell recommendation amid news that PC shipments dropped 14 percent in the first quarter, in part because Windows 8 hasn't caught on.

Microsoft fell 5.1 percent to $28.75 at 2:35 p.m. Until today, it had been slightly outpacing the surging Standard & Poor's 500 Index with a 13 percent gain since Jan. 1. But the shares have been sliding sideways for a decade or more, mostly stuck in the $20 to $30 range as rivals like Google and Apple have zoomed past.

A Goldman analyst wrote: "The company faces critical secular challenges given the deteriorating PC demand backdrop" and profit and sales will "gradually deteriorate unless Microsoft successfully repositions itself as a more meaningful participant in the new era of consumer computers."

Worldwide PC shipments had their worst quarter since records have been kept dating back to 1995 as more people switch to tablets and smartphones. Windows 8 has been lauded by critics for new features and functions but it requires users to learn a new way of operating the PC without many familiar landmarks.

Another factor weighing on Microsoft is Surface, its tablet computer. The company has only sold 1.5 million of the devices since October, Bloomberg News reported, compared with analysts' estimates of 2 million.

Still, the world's top software maker has over $60 billion in cash and investments, enough to allow its managers to pursue nearly any strategy as long as they wish.