Q2 Preview: Will Windows 8 Cause Microsoft (MSFT) Investors More 'Pane'?


Microsoft (Nasdaq: MSFT) shares are in positive territory heading into the software giant's second-quarter 2013 report, which is expected out after markets close Thursday.

Wall Street analysts are looking for Microsoft to report EPS of 75 cents on revenue of $21.53 billion. The number compares with EPS of 78 cents on revs of $20.89 billion reported in the same period last year.

By segment, the Street is looking for Windows revs of $5.84 billion ($4.74 billion last year), Server & Tools at $5.22 billion ($4.77 billion last year), Online Services of $866 million (vs. $784 million), Microsoft Business Division at $5.92 billion (vs. $6.28 billion), and Entertainment & Devices of $3.71 billion (compared with $4.24 billion).

Microsoft has been hovering near annual lows since just about last November, only recently mounting a charge higher. Most investors have been speculating on the potential for Windows 8 given mixed reviews and, well, high pricing of its Surface tablet. Looking above, you also see Business and Entertainment revs dropping. Given the broader adaption of playing video games on mobile devices as well as Google (Nasdaq: GOOG) making a strong push with its Docs, these should be two key areas of focus.

On the Surface tablet, Microsoft may disclose sales for the quarter and the Street is currently at a modest one million units, according to Citi.

Windows estimates may or may not include Surface numbers. At CES earlier in January, the company said that about 60 million licenses for Windows 8 have been sold so far. That number is likely to go up, although Microsoft might also simply stick to that number for now. JPMorgan noted that investors should also keep an eye out for end-channel inventory numbers and demand from OEMs. It would be a "relief" in inventories are lean.

Shares of Microsoft have trickled just over 5 percent lower since reporting first-quarter results last October, about double the S&P's move. The stock is up about 1 percent Thursday.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Earnings , Stocks

Referenced Stocks: GOOG , MSFT



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