Make Way for Microsoft

At first glance, the company's numbers are likely to suffer in comparison to the year-ago quarter. But if Wall Street is right, the company actually did rather well. Here's how to read the fine print in the earnings release:

The guarantee will trip about $1 billion from the client business unit, the group that includes Windows, Microsoft estimates. But those dollars will be reflected on the balance sheet as deferred or unearned revenue. Ultimately, revenue from the guarantee will move back to the income statement in much the same way any deferred revenue would.

A year ago, the company's client unit added $3.4 billion to the top line. Microsoft figures it will be more like $2.5 billion to $2.6 billion in the most recent December quarter before adding back deferred revenue. If the total of actual plus deferred revenue is much below $3.6 billion, something went wrong.

Similarly, the business division, which oversees sales of Office, will experience a shift of some $500 million away from the income statement and onto the balance sheet. A year ago, the group posted revenue of $3.7 billion. This year it likely will range from $3.3 billion to $3.4 billion, the company says. Adding back revenue from the guarantee (for the newest version of Office) should bring the total to about $3.8 billion.