Earnings Preview: Microsoft

| About: Microsoft Corporation (MSFT)

Microsoft (NASDAQ:MSFT) is expected to report Q3 earnings after the market close on Thursday, April 19, with a conference call scheduled for 5:30 pm ET.


The consensus estimate is 58c for EPS and $17.18B for revenue, according to First Call. Microsoft's Q3 results are expected to be buoyed by strong performances from its Office software and server and tools divisions. Wall Street isn't expecting much from Microsoft this quarter, with Q3 being viewed as a "transitional quarter" for the company. Investors are more focused on the next couple of quarters as: by year's end Microsoft's Windows 8 operating system will be on the market, as will its Windows Server. Its Office 15 software could be available at the beginning of 2013. The whisper number is 60c, 2c ahead of consensus. Last quarter the company reported earnings 2c short of the whisper number.

Analyst Views

For Q3, Wells Fargo projects total revenue of $17.1B, up 4.1% year-over-year, operating income of $5.9B, up 3.3% year-over-year, and EPS of 59c, down 4.3% year-over-year, due to higher projected tax rate than a year ago. Wells Fargo believes that the potential recovery in the PC market could generate some slight upside potential to the firm's estimates in the Windows and Windows Live Division business. Wells Fargo says another mild positive is the announcement by Nokia (NYSE:NOK) on its April 11 earnings call that it had sold over 2M Lumia devices and that the Windows Phone ecosystem now has more than 80,000 mobile apps. Gaming industry reports by NPD indicate that Xbox continues to lead the market, however software, hardware, and accessory sales were significantly lower than last year in both January and March, which could negatively affect E&D in Q3.

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Tagged: , Application Software, Earnings
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