Microsoft Shares Right on Schedule

Still, it was the company's outlook that appeared more disappointing. The company guided to earnings of 32 to 33 cents a share in the second, holiday quarter on $11.9 billion to $12 billion in sales. At the midpoints, that outlook was 2.5 cents a share below consensus profit expectations and $340 million below the Street's revenue projection.

Meanwhile, Microsoft essentially left its full-year targets unchanged, saying that it expects to earn $1.26 to $1.30 a share on sales ranging from $43.7 billion to $44.5 billion. The company's decision to stand pat on guidance came despite its decision to push up its share buyback program by 18 months. The company now plans to buy back $19 billion worth of stock by December 2006.

Between now and then, Microsoft plans to refresh many of its major product lines. The company will launch its new video-game console, the Xbox 360, and the next iteration of SQL Server by the end of this year. Next year, the company plans to roll out new versions of Office and Windows.

Those new products should boost revenue and earnings, although analysts differ on how soon they'll provide a lift -- whether it will come this fiscal year or in coming ones. Regardless, most analysts think they will jumpstart Microsoft's stock price as investors anticipate improving results.

"We believe the company's business is going to start [to] accelerate, and this past quarter marks the inflection point," said Friedman Billings Ramsey analyst David Hilal, whose firm has not done recent investment banking business for Microsoft.

Other analysts, though, think investors will need to show some patience. Microsoft isn't likely to show improved results until next calendar year noted UBS analyst Heather Bellini, thanks in part to the fact that it will be spending significant amounts in the short term on marketing its new products. But the company's likely strong earnings growth next year will improve the outlook for the stock, she said.