Microsoft Windows 7 Debuts After a Hard Quarter

REDMOND, Wash. (TheStreet) -- Microsoft(MSFT) launched its much-hyped Windows 7 operating system Thursday, although the software giant's quarterly results may bring it back to earth with a bump.

Analysts surveyed by Thomson Reuters expect Microsoft to report revenue of $12.37 billion when it posts its first-quarter numbers (subscription required) before the market opens Friday. This would be a significant drop from sales of $15.06 billion in the same period last year. Microsoft is expected to earn 32 cents a share, compared to 48 cents a share in the prior year's quarter.

Even in a healthier economy, however,PC weakness remains the biggest cloud hanging over Redmond. Despite signs of an improving computer market, Collins Stewart analyst Sandeep Aggarwal warns that demand is unlikely to prevent declining year-over-year sales.

During its third-quarter conference call last week, chipmaker Intel(INTC) warned that overall enterprise spending remains weak and predicted that this trend could continue into the fourth quarter. "The lights have been out for quite a while" for desktops and notebooks, said CEO Paul Otellini, but he discussed the possibility of a Windows 7-driven uptick.

Touted by Microsoft as its best PC operating system ever, great things are expected from Windows 7. Clearly there is plenty of buzz surrounding the software and its impact on PC sales, although it could be some time before Microsoft reaps the benefits of its shiny new OS. In a recent note, for example, Jefferies & Company analyst Katherine Egbert predicted that firms are not likely to start their Windows 7 upgrades until mid-2010.