Wednesday, January 26, 2011

Microsoft Corporation (NASDAQ: MSFT): Q2 Earnings Preview

Microsoft Corporation (NASDAQ: MSFT), the world's largest software maker, is scheduled to release its fiscal second-quarter earnings after the closing bell on Thursday, January 27, 2011. Analysts, on average, expect the company to report earnings of 68 cents per share on revenue of $19.14 billion. In the year ago period, the company reported earnings of 74 cents per share on revenue of $19.02 billion.

Microsoft Corporation develops, manufactures, licenses, and supports a range of software products and services for various computing devices worldwide. The company is organized into five operating segments: Windows and Windows Live, Server and Tools, Online Services, Microsoft Business, and Entertainment and Devices. 

In the preceding first-quarter, the Redmond, Washington-based company's net income was  $5.4 billion, or 62 cents a share, compared to $3.6 billion, or 40 cents a share, in the year-ago quarter. Revenue climbed 25% to $16.2 billion from $12.92 billion in the same quarter last year. Analysts, on average, expected the company to report earnings of 55 cents per share on revenue of $15.81 billion. 

The company has benefited from solid enterprise growth and continued strong consumer demand for Office 2010, Windows 7, and Xbox 360 consoles and games. Microsoft launched its Kinect motion camera accessory in November, and at CES, the company announced it had moved 8 million units in just 60 days, making it a hit. Another new product for this quarter is Microsoft's Windows Phone 7, which was launched in Europe in late-October of last year and in the U.S. and Canada during the second week in November, giving it only a few weeks to make it into this quarter's records. Microsoft has kept fairly mum on Windows Phone 7 sales since launch, short of saying that it had sold more than 1.5 million of the devices to mobile operators (though not necessarily end users) within its first six weeks on the market.

Microsoft needs to regain momentum in the mobile computing sector as Apple’s iPad and a host of competing slate or tablet devices are poised to reshape the software industry. Steve Ballmer, chief executive officer of Microsoft Corp., recently laid out an aggressive vision for the company’s flagship Windows platform, saying he intends for the software to power a range of consumer devices with no loss in performance from its typical PC environment.

The company is trying hard to capture a bigger share of the online search advertising market. Since it launched Bing in June this year, Microsoft has been steadily gaining ground. According to comScore, Microsoft’s Bing reached an all-time high market share of 12 percent in December from 11.8 percent in November 2010.

Microsoft is also taking initial steps towards cloud computing to counter a threat from Google and others.

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