An influential Wall Street analyst downgraded Microsoft yesterday, citing renewed evidence that consumers were buying fewer personal computers.

Shares in the world's most highly valued software company fell by $3.81 -about 8% - to $52.88 after Rick Sherlund of Goldman Sachs, which handled Microsoft's initial public offering in 1986, trimmed his earnings and sales estimates for the next six months.

Mr Sherlund described the revision as "relatively moderate" and based on the "preponderance of evidence of sluggish retail PC demand". Apple Computer underlined the slowdown in consumer spending this week when it issued a profits warning.

Goldman Sachs trimmed both earnings and sales estimates for Microsoft, cutting $125m from the revenue forecast to $6.7bn-$6.8bn. The Apple warning also helped prompt a Microsoft downgrade at rival Merrill Lynch, where analyst Chris Shilakes predicted weakening demand for software upgrades.

In a note to investors, Goldman tried to lessen the impact of its downgrade by saying retail PC purchases account for only 10% of Microsoft revenues.

Mr Sherlund also suggested that much of the downgrade had already been digested by the market. Shares in Microsoft have more than halved since the beginning of a year in which it has fallen foul of the courts for abusing its monopoly position.