By: Brendan Gilmartin
Microsoft (NASDAQ:MSFT) is scheduled to report 2Q 2013 earnings after the close of trading on Thursday, January 24. Results are typically reported between 4:05 p.m. and 4:15 p.m. EST with a conference call to follow at 5:30 p.m. Aside from the underlying shares, the technology related ETFs (PowerShares (NASDAQ:QQQ)/SPDR Technology ETF (NYSEARCA:XLK)) may also move off the Microsoft report, along with the index futures, provided the results precede the CME scheduled maintenance shutdown at 4:15 p.m.
For the 1Q 2013, the estimate is $0.75 (Source: Yahoo Finance) with revenue reaching $21.57 bln. The high number on the Street is $0.87.
- 01/22: Citing a report on WSJ, CNBC reported that Microsoft was considering being a part of the group aimed at taking Dell (NASDAQ:DELL) private. Microsoft shares sold off on the news that it may contribute a couple billion dollars or preferred shares to fund the deal.
- 01/22: Microsoft announced its Surface Windows 8 Pro will be available for purchase on Feb. 9, 2013, in the US and Canada.
- 01/11: Goldman Sachs issued cautious comments on Microsoft ahead of the 2Q 2013 earnings release, according to a post on StreetInsider.com. The firm sees Microsoft earning $0.71 per share on revenue of $21.3 billion, due in part to a decline in PC shipments and slower adoption of Windows 8. Goldman Sachs carries a Neutral rating on the shares with a $31 price target.
- 01/10: Morgan Stanley downgraded Microsoft from Overweight to Equal-weight, according to Barron's Online. The firm sited slow adoption of Windows 8 and the weak PC market.
- 12/12: Standpoint Research upgraded Microsoft from Hold to Buy with a price target of $32.00, following a 15% share price pullback over a 3-month period, according to StreetInsider.com. The firm also sites new products - Xbox, Windows 8 and Surface.
- 11/28: Microsoft declared a quarterly dividend of $0.23/share. The current estimate is 3.39%.
Microsoft shares have been meandering in a narrow trading range over the past couple months between $26.50 and $27.50. More recently the shares nudged up against the high end of that range - a key resistance area. A move through $27.50 could set up a run back toward the 200-Day SMA near $29.00 if results surprise to the upside. Conversely, shares could easily drop to the recent lows at $26.50 if results fall shy of consensus. (Chart courtesy of StockCharts.com)
Microsoft shares have been meandering in a narrow trading range over the past couple months. On one hand, new product offerings, including expansion of the Xbox line, the Surface tablet, and a solid dividend yield are luring buyers. However, weaker PC sales (down 6.4% in the 4Q to 89.8 mln units - IDC) and slower than expected adoption of Windows 8 have weighed on the shares. Against this backdrop, a marginal beat on earnings could drive the shares through a key resistance level in the $27.50-area, with room to run toward $29.00 (200-Day SMA). On the contrary, Microsoft could re-test the low end of the trading channel at $26.50 and longer-term support near $26.00 should results fail to meet estimates.
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