Microsoft Favors Short Trade Off Evening Earnings Reports

| About: Microsoft Corporation (MSFT)
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Microsoft (NASDAQ:MSFT) is slated to report its Q2 results in tonight's after-hours session, and analysts polled by Capital IQ are expecting the software giant to report a profit of $0.75 per share on revenue of $21.51 billion.

Microsoft is mixed in its trading pattern between the sessions, cutting back its extended-hours trade in next-day action in 18 of its last 35 quarterly earnings events.

MSFT is usually not a stock that benefits longs. In fact, it generally favors cutting back its extended-hours gains in the following day's regular session and adding to its downside evening moves. MSFT has recorded 18 earnings-driven off-hours gains in 35 quarters we've tracked. In 12 of those upside extended-hours moves the stock has narrowed or reversed course the following regular session (67% of the time).

MSFT has declined 17 times in the after-hours following earnings, and in 10 of those quarters it has added to its downside move the following day (59% of the time).

On Oct. 18, 2012, MSFT declined 1.3% in evening trade after posting mixed Q1 results. The stock moved deeper in the red the next day, ending the Oct. 19 regular session off 2.9%.

On July 19, 2012, MSFT gained 2.5% in after-hours trade after beating on Q4 earnings but also coming in shy on revenue. The stock headed south the next day, closing the July 20 regular session down 1.8%.

On April 19, 2012, MSFT advanced 2.8% in night trade after topping Q3 estimates. The stock added to its upside the next day, closing the April 20 regular session up 4.5%.

On Jan. 19, 2012, MSFT advanced 2.2% in evening trade after topping Q2 earnings estimates. The stock jumped higher the next day, advancing 5.6% by the close on Jan. 20.

On Oct. 20, 2011, the stock fell 0.6% after in-line Q1 results. Shares reversed to close up 0.3% the next day.

On July 21, 2011, the stock slipped 0.2% in after-hours trading after a Q4 earnings beat. Shares rebounded with a 1.6% gain the following day.

On April 28, 2011, MSFT declined 1.7% in evening trade despite beating Q3 expectations. The stock added to its downside the following day, ending down 2.9% on April 29.

On Jan. 27, 2011, MSFT slipped 0.07% in after-hours trade despite beating quarterly expectations. The stock moved deeper in the red the following day, closing the Jan. 28 regular session down 3.8%.

On Oct. 28, 2010, MSFT advanced 3% in after-hours trade after beating Q1 expectations. The stock lost just more than half that gain the next day, closing the Oct. 29 regular session up 1.4%.

On July 22, 2010, MSFT slipped 0.1% in evening trade despite topping Q4 estimates. It ended the July 23 regular session with the same 0.1% decline.

On April 22, 2010, MSFT declined 3.2% in after-hours action after posting Q3 results ahead of Street estimates. The stock saw its downside narrow the following day, closing the April 23 regular session down 1.3%.

On Jan. 28, 2010, MSFT clawed 0.3% higher in after-hours trade after reporting Q2 results that were about in line with expectations. The stock lost its upside the following day, ending the Jan. 29 regular session down 3.3%.

On Oct. 23, 2009, MSFT jumped 9.5% in pre-market trade after topping Q1 expectations. The stock lost a good chunk of its gains in the follow-on regular session, closing Oct. 23 bell-to-bell play up 5.3%.

On July 23, 2009, MSFT declined 7.7% in after-hours trade after missing Q4 revenue expectations. The stock added to its downside in the July 24 regular session, ending down 8.2%.

On April 23, 2009, MSFT advanced 3.5% in after-hours trade despite missing Q3 revenue expectations. The stock surged higher in the following day's regular session, ending up 10.5%.

On Jan. 22, 2009, MSFT declined 7.2% in pre-market trade after reporting results below Street estimates. The stock tumbled even deeper in the red in that day's regular session, closing down 11.7%.

On Oct. 23, 2008, MSFT edged up 0.1% in after-hours trade after topping Q1 expectations but also setting its guidance below Street estimates. It turned red the following day, closing the Oct. 24 regular session down 1.6%.

On July 17, 2008, the stock fell 6.4% during evening trading after missing by a penny and setting Q1 guidance just below Street. The stock fell 6% the following day.

On April 24, 2008, MSFT declined 4.8% in after-hours trade after reporting a year-over-year decline in earnings. The stock saw its downside expand the next day, losing 6.1% by the April 25 regular session close.

On Jan. 24, 2008, MSFT gained 4.6% in night trade after besting the Street's estimates for Q2 and setting its outlook to match or beat expectations. That gain evaporated the next day as MSFT ended the Jan. 25 regular session down 0.9%.

On Oct. 25, 2007, MSFT leaped 11.2% in night trade after topping with Q1 results and setting its Q2 guidance in-line to higher than Street estimates. Traders shaved off some of that upside the following day, with MSFT closing the Oct. 26 regular session up 9.5%.

On July 19, 2007, MSFT slipped 1.8% in after-hours trade on the heels of better-than-expected Q4 revenue and guidance that straddled the then-current Street view. It saw some of that decline narrow the next day, ending the July 20 regular session off 1.1%

On April 26, 2007, MSFT rose 4.2% in night trade after topping Q3 estimates and offering mixed guidance. Shares eased off those highs the next day, ending the regular session up 3.5%.

On Jan. 25, 2007, the stock gained 1.8% in the evening hours after the company tops with its latest figures and guides mostly in line. The gain was a slender 0.5% the next day.

On Oct. 26, 2006, MSFT edged up 0.5% in after-hours when the company beat Q1 sales estimates but forecast Q2 revenues to be below Street views. Shares fell into negative territory, closing the following day session down 0.04%.

On July 20, 2006, shares gained 5.7% in the evening hours after the company beat with Q4 results and set a share buyback. The stock finished up 4.5% the next day.

On April 27, 2006, MSFT lost 6.4% after reporting improved Q3 results from a year ago but forecasting lower-than-expected Q4 and FY EPS. Shares tumbled further the next day, closing the regular session down 11.3%.

On Jan. 26, 2006, shares rose 2.2% after the company reported improved results from the comparable quarter and guided mostly in line for the coming quarter. The gain was a steeper 4.7% the next day.

On October 27, 2005, MSFT eased 1.5% in night trade after just missing Q1 sales estimates and offering Q2 guidance that was weaker than analysts' expectations. However, shares came back the next day, ending the regular session up 2.7%.

On July 21, 2005, MSFT sank 1.8% in after-hours trading after Q4 EPS topped the Street forecast but the company guided Q1 revenue below the Street. It fell even farther in the July 22 regular session, ending 2.8% lower.

On April 28, 2005 MSFT edged 0.6% higher in night trade after the company reported revenue results just shy of estimates but guided for stronger-than-expected sales. The stock surged higher the next day, rising 3.5% by the closing bell on April 29.

On Jan. 27, 2005, MSFT added 1.8% in that night's after-hours session after the company topped revenue expectations and guided higher. The stock watched its upside slip away in next-day trade, ending bell-to-bell play up 0.2%.

On Oct. 21, 2004 MSFT declined 1.7% after beating on revenue and guiding its forward outlook below the Street. Sellers tapped it down 2.8% in the Oct. 22 regular session.

Back on July 22, 2004 the company posted higher revenue and an in-line outlook, and the stock dropped 2.2% in after-hours trade. Pressure mounted between the bells on July 23 as MSFT ultimately saw a 3.3% downside by the close.

Finally, on April 22, 2004 MSFT advanced 4.7% after the company blew past expectations and guided higher. Buy momentum picked up a heftier pace on April 23, and the issue closed the day session up 6.1%.

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.