Microsoft Corp. (Nasdaq: MSFT) shares are trading lower Thursday
heading into the company's quarterly earnings report.
Expected out after the market closes, Microsoft should report
first-quarter earnings of 68 cents per share on revenue of $17.25
billion. Earnings would be a 1.5 percent decline from 69 cents
reported last quarter, and 9.7 percent gain from the same period
last year. Microsoft has bested estimates by about 13.5 percent
over the last four quarters, suggesting the company could report
EPS of 77 cents.
Microsoft shares moved 3.7 percent lower through the quarter and
are up 8 percent since the end of the quarter. Microsoft has traded
in a range of $23.65 to $29.46 over the last 52-week time frame.
Microsoft trades for 8.6x next years earnings expectations,
compared with 10.4x at Apple (Nasdaq: AAPL), 11.9x for Oracle
(Nasdaq: ORCL), and 13.4x for Google (Nasdaq: GOOG).
Data from Bloomberg has 25 analysts with a Buy on Microsoft, 10 at
Hold, and one suggesting to Sell. The price target average is $32,
with a low of $28 and high of $35.
- Goldman Sachs sees earnings of 67 and revenue of $17.1
billion. Goldman says checks point to "slowdown in certain areas
of IT spend in the September quarter versus the first half of
Continuing, "Our channel conversations also suggest that
customers feel as if they can more easily delay certain Microsoft
related spend (e.g. SQL server and Office). With that said, we
would note that Microsoft likely benefited from deals that pushed
from the June quarter to September, which could help to offset
some softness due to the macro backdrop. Overall, we see the
potential for the company to post results slightly below
consensus for revenue and EPS."
Goldman sees Windows revs of $4.88 billion, server and tools
revenue of $4.305 billion, MBD revs of $5.30 billion, and Online
Services Division revs of $618 million.
- JPMorgan sees earnings of 65 cents per share on revenue of
$17.057 billion. JPMorgan notes while PC growth is expected in
the quarter, most will come from emerging markets where
Microsoft's average selling price is lower. "The tablet
phenomenon is one factor in the weak growth prospect for PCs, and
we expect this will only be exacerbated as Amazon.com enters the
market with a relatively inexpensive tablet model. We do not
expect Microsoft will be competitive in the tablet market for at
least another year when Windows 8 is likely to be GA'd."
- Deutsche Bank is looking for an in-line quarter from
Microsoft. The firm is modeling for earnings of 66 cents per
share and revs of $17.1 billion. "Our PC analyst forecasts PC
unit growth of -6% y/y in the US and -4% y/y in Western Europe
for 3Q11. Even though these two regions account for about one
third of the global PC shipments, high degree of software piracy
in the emerging economies makes these regions the drivers of PC
revenues for MSFT. Gartner also recently lowered their global
forecast for PC shipment to 3.8% y/y. Western Europe and US which
together make up close to 33% of PC shipments are expected to
contract 12.3% and 1.2% respectively in 2011."
- Collins Stewart is modeling EPS of 68 cents and revenue of
$17.26 billion. "PC market data points suggest a continuation of
several trends for the first half of this year, with weakness in
consumer demand in developed markets being offset by growth in
businesses and in emerging markets. Still PC's should show
improving Y/Y growth relative to recent quarters, as Gartner last
week indicating PC market growth of 3% (versus a 2% Y/Y decline
in the first half of C2011), and comparisons ease more so for
Microsoft in future quarters."
- BGC is looking for revenue of $17.34 billion and earnings of
68 cents per share. BGC sees the current fiscal year "posing a
leaner environment for positive upside surprises as the Windows 7
/ Office2010 upgrade cycle starts to age. We still see activity
from the corporate refresh cycle driving results but do not
expect conditions and demand in the consumer PC market to
meaningfully change until the release of Windows 8 next year."
BGC is also bullish on Microsoft's cost controls, and sees it
continuing to be the best at returning capital to shareholders.
BGC expects revenue will continue to grow faster than expenses,
despite investments in phones, search, and Windows 8 development
and marketing. The firm is modeling for Windows revs of $4.7
billion, Server revs of $4.5 billion, Online of $677 million,
Business of $5.7 billion, and Entertainment of $1.5 billion in
Stay tuned to StreetInsider.com's
section to see our analysis of the highly-anticipated quarterly
results within seconds of their release. You can also check out
Microsoft's past performance at Streetinsider's
Microsoft Income Statement