Wall Street analysts on average estimate that Microsoft /quotes/comstock/15*!msft/quotes/nls/msft (MSFT 24.20, -0.09, -0.37%) will post earnings of 36 cents a share for the period ending in June, on $14.38 billion in revenue, according to data from Thomson Reuters.
That compares to earnings of 46 cents a share and $15.84 billion in revenue in the same period a year earlier.
The report will come after a month in which Microsoft saw some encouraging signs from its recently-revamped Internet search service, called Bing. According to data from comScore Inc., Bing helped Microsoft win some search market share from Yahoo Inc. /quotes/comstock/15*!yhoo/quotes/nls/yhoo (YHOO 17.19, +0.35, +2.08%) in June.
The earnings report will also come just days after speculation swirled once again that Microsoft and Yahoo may yet sign a search partnership that would have them teaming up on market leader Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 429.50, -0.75, -0.17%) The technology blog AllThingsD reported Friday that Microsoft executives are meeting with counterparts at Yahoo this week to iron out a deal, which could be announced soon.
Still, search remains a relatively small part of Microsoft's earnings reports, which are usually dominated by the twin profit engines of Windows and Office software. Recent data on personal computer shipments do not bode well for these businesses.
Research firm Gartner Inc. released data on Wednesday showing that PC shipments fell 5% in the second quarter of the calendar year, to 68.1 million units. That was a better-then-expected result, Gartner noted, but still an indication that the market is in decline.
Microsoft partner Hewlett-Packard Co. /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 40.02, +0.04, +0.10%) saw its shipments actually grow 2.8% in the quarter, though another partner, Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 12.64, -0.03, -0.24%) , saw its shipments tumble 17%, according to Gartner.
Auriga USA analyst Gregg Moskowitz saw the Gartner data as a positive sign for Microsoft's fourth quarter.
The analyst raised his profit and sales estimates for Microsoft in the period, and specifically raised his estimate for the company's client unit, which includes Windows. Moskowitz wrote in a research note that he expects the client unit to report $3.43 billion in revenue in the quarter, up from his prior estimate of $3.28 billion.
One likely drawback for the client unit, the analyst noted, was the strong demand for smaller, netbook laptop computers in the quarter. Microsoft dominates the market for software running on netbooks, though it currently only sells a lower-cost version of Windows tailored for the pared-down machines.
Moskowitz has a $24 price target on Microsoft shares.
The shares have risen roughly 20% in the year to date, slightly ahead of the Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 1,887, +1.58, +0.08%) , and were trading at $24.24 Friday afternoon.
John Letzing is a MarketWatch reporter based in San Francisco.
That compares to earnings of 46 cents a share and $15.84 billion in revenue in the same period a year earlier.
The report will come after a month in which Microsoft saw some encouraging signs from its recently-revamped Internet search service, called Bing. According to data from comScore Inc., Bing helped Microsoft win some search market share from Yahoo Inc. /quotes/comstock/15*!yhoo/quotes/nls/yhoo (YHOO 17.19, +0.35, +2.08%) in June.
The earnings report will also come just days after speculation swirled once again that Microsoft and Yahoo may yet sign a search partnership that would have them teaming up on market leader Google Inc. /quotes/comstock/15*!goog/quotes/nls/goog (GOOG 429.50, -0.75, -0.17%) The technology blog AllThingsD reported Friday that Microsoft executives are meeting with counterparts at Yahoo this week to iron out a deal, which could be announced soon.
Still, search remains a relatively small part of Microsoft's earnings reports, which are usually dominated by the twin profit engines of Windows and Office software. Recent data on personal computer shipments do not bode well for these businesses.
Research firm Gartner Inc. released data on Wednesday showing that PC shipments fell 5% in the second quarter of the calendar year, to 68.1 million units. That was a better-then-expected result, Gartner noted, but still an indication that the market is in decline.
Microsoft partner Hewlett-Packard Co. /quotes/comstock/13*!hpq/quotes/nls/hpq (HPQ 40.02, +0.04, +0.10%) saw its shipments actually grow 2.8% in the quarter, though another partner, Dell Inc. /quotes/comstock/15*!dell/quotes/nls/dell (DELL 12.64, -0.03, -0.24%) , saw its shipments tumble 17%, according to Gartner.
Auriga USA analyst Gregg Moskowitz saw the Gartner data as a positive sign for Microsoft's fourth quarter.
The analyst raised his profit and sales estimates for Microsoft in the period, and specifically raised his estimate for the company's client unit, which includes Windows. Moskowitz wrote in a research note that he expects the client unit to report $3.43 billion in revenue in the quarter, up from his prior estimate of $3.28 billion.
One likely drawback for the client unit, the analyst noted, was the strong demand for smaller, netbook laptop computers in the quarter. Microsoft dominates the market for software running on netbooks, though it currently only sells a lower-cost version of Windows tailored for the pared-down machines.
Moskowitz has a $24 price target on Microsoft shares.
The shares have risen roughly 20% in the year to date, slightly ahead of the Nasdaq Composite Index /quotes/comstock/10y!i:comp (COMP 1,887, +1.58, +0.08%) , and were trading at $24.24 Friday afternoon.
John Letzing is a MarketWatch reporter based in San Francisco.
