Microsoft (MSFT - commentary - Cramer's Take) will report numbers for its September quarter this evening after the close of trading.
The Street expects revenue of $14.78 billion and earnings of 47 cents per share for the quarter ended Sept. 30, 2008. For the December quarter, current consensus is for earnings of 55 cents per share on revenue of $17.96 billion. For fiscal 2009, current estimates are for revenue of $66.51 billion and earnings of $2.11 per share. For 2010, the sell-siders estimate revenue of $72.65 billion and earnings of $2.36 per share.
Here are some questions to bear in mind when poring over the press release and listening to the earnings call:
How is the client and business division performing?
How is the perpetual buyback coming along? (Microsoft has beat in the first quarter for the last five years in a row, thanks to the perpetual buyback and decreased spending in the quarter.)
How is the international business progressing, especially Japan and Europe?
How are ASPs faring given the global economic headwinds?
What are the present gross-margin and operating-margin trends?
For the past three years in a row, Microsoft has seen December quarter revenue grow by average of 22% over the September quarter. Does this trend continue? (I think not.)
What does management have to say about the current demand environment?
What does the company say about competitive pressures going forward?
What about software piracy? Is the company making inroads into combating software piracy globally?
Has the company seen any market share gains?
What are the expectations for Xbox going into the holiday shopping season?
I think that there is risk to the company's revenue going forward due to the economic uncertainty, but the company should be able to defend its earnings forecast if one looks at the mammoth buyback initiated last month ($40 billion). If the buyback is removed from the picture, however, Microsoft earnings could be at risk due to the turbulence that global economies are currently experiencing.
For the time being, Gartner recently said that September PC sales were up 15% to 16% over what Microsoft had forecast, which was up 10% to 12%, so watch for an upside beat this time around based on that data from the research firm.
Good luck, whichever way you are positioned going into today's earnings, good guy or dark-sider.
P.S. Will you be there when Cramer makes his next move?
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Software ADBE Beats Again 9/17/2008 8:33 AM EDT Revenue in the quarter was $887 million, and pro forma EPS were 50 cents.
Software ADBE Preview: Is Demand Holding Up? 9/16/2008 8:03 AM EDT Current consensus estimates call for revenue of $877 million and pro forma EPS of 46 cents.
At the time of publication, Somaney had no positions in the stocks mentioned, although positions may change at any time without notice. Jay Somaney is a partner and fund manager with TSG Capital Partners, a hedge fund based in Plano, Texas, and founder of GlobalTechStocks.com, a subscription site that focuses on technology and Indian stocks (including ADRs), providing information, news and chatter. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Somaney appreciates your feedback; click here to send him an email.
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