6 Things To Watch Out For In Microsoft's Next Earnings Report

| About: Microsoft Corporation (MSFT)

Microsoft Corp. (NASDAQ:MSFT) have announced that it will publish fiscal year 2013 third-quarter financial results after the close of the market on Thursday, April 18, 2013. The results will be published on its Microsoft Investor Relations website.

As someone who watches Microsoft pretty closely, there are a few things I will be looking closely at. In this article, I will be referencing numbers from its last earnings statement.

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Windows Division

For Q2 2013, the Windows Division posted a 24 percent revenue gain, year-over-year, to $5.88 billion. When adjusted for $783 million in deferred Windows 8 pre-sale revenues, Windows revenues were still up 11 percent year-over-year. I have said (and still believe) that this quarter will be when we really start to get a handle on whether the public and OEMs are buying Windows 8. Watch those numbers closely during the next earnings release.

Windows 7

Microsoft recently stated that 60 percent of all enterprise desktops now run Windows 7. I will be looking to see if that percentage changes. A lot of companies will be getting off XP soon (due to the end of support for that OS), it will be interesting to see if those companies make the move to Windows 7 or Windows 8. In my opinion, if that Windows 7 percentage doesn't start to dip, even if just a little bit, it could be the beginning of bigger problems.

Windows 8

This one's easy. Microsoft said that it has sold "over 60 million copies" of Windows 8 - I would like to see how much larger that number has grown, especially with the product launch discounts winding down. It will be interesting to see how many people or companies are paying over $100 for Windows 8.

Business Division

The Business division took a 10% year over year loss last quarter with $5.6B down from $6.3B. Since Microsoft launched Office 2013, new Office productivity suites, Office 365 online services, and new Office servers, I'll be looking to see if revenue numbers match the hype here. I'm expecting to see a substantial bump.

Microsoft Surface Tablets

Microsoft hasn't provided sales numbers for its Surface with Windows RT tablet, which launched in October. Well since then, there's been the launch of the Surface Pro and it will be telling to see how many more units have moved.

In March of this year, Bloomberg estimated 1.5 million units of the Surface tablet were sold. Their estimate stated that approximately 400,000 of that number were Surface Pros.

I'm looking to see if:

  1. Microsoft confirms those Bloomberg numbers
  2. If the numbers actually are trending up in any way.

Online Services

The Online Services Division, saw revenues up 11 percent to $869 million. But Online Services still lost $283 million in the quarter, down from last year's loss of $459 million.

With all the negative advertising against Google (NASDAQ:GOOG) over the last 3 months, it will be interesting to see if the company is:

  1. Losing money at a slower pace
  2. Actually making money

I believe all those points combined should start to provide a good, layered profile about just how well the company is doing and could be an indication about how bearish or bullish the future could be for this company.

What about you? What are you looking for at the next Microsoft earnings call?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. While I have no business relationship with Microsoft of any sort, I am the owner and editor of several Windows websites (Windows8update.com etc).