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January 25, 2006

Microsoft earnings previews: Same old, same old

Posted by David Hunter at 8:44 PM ET.

Microsoft will announce earnings (2Q FY2006) tomorrow after the market close and here’s a roundup of previews:


Wall Street is looking for results that generally fall in line with expectations. A supply squeeze on Xbox 360 game system may result in lower home and entertainment revenue, although analysts speculate that since the company reportedly sells the consoles at a loss, lowered Xbox sales may not hurt earnings per share.

Analysts also believe there may be upside to servers and tool sales, which could offset a revenue shortfall due to Xbox sales.

Daisuke Wakabayashi at Reuters:

Microsoft Corp. may post lackluster quarterly earnings this week if early signs of weakness in personal computers and the company’s new video game console are borne out, investors and analysts said.

The $40 billion software giant will need to inspire more excitement from investors to jumpstart a share price that has fallen 4 percent since the start of 2004, versus a 12 percent rise on the Nasdaq and a 14 percent gain on the S&P 500.

Analysts are forecasting second-quarter earnings per share to rise slightly to 33 cents per share, compared with 32 cents a year earlier, with estimates ranging from 32 cents to 35 cents a share, according to Reuters Estimates.

Michael Paige at MarketWatch:

Microsoft is expected to have earned 33 cents a share, including stock-option expenses, on revenue of $11.96 billion for its fiscal second quarter, up from 32 cents a share and $10.82 billion, according to the average estimate of analysts surveyed by Thomson First Call.

In late October, Microsoft predicted earnings of 32 cents to 33 cents a share on revenue of $11.9 billion to $12 billion for the quarter that ended Dec. 31.

Filed under Financial, General Business

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