This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Microsoft Defines Waiting Game

Stocks in this article: MSFT

NEW YORK ( TheStreet) -- No tech company defines the waiting game better than Microsoft (MSFT).

The Redmond, Wash. tech giant, on deck to report fiscal third-quarter earnings after the bell Thursday, is likely to repeat the same pattern spun out over the past five or so quarters: A post of solid top- and bottom-line growth, followed by a drop in stock price that lasts for at least a few days.

While some analysts say that investor patience is about to pay off, a lasting pop in Microsoft's stock won't likely hit until the firm shows tangible evidence of overcoming the two big problems perceived by investors: A (tablet?) plan to offset what could be long-term softness in the consumer PC sector and doing a better job of catching up to rival mobile OS brands like Apple (AAPL) and Google (GOOG).

Despite solid reviews of phones running it, Windows mobile has fueled uneasiness in investors, due partly to the company's reticence regarding just how many Windows Phone 7 handsets have been activated by consumers. In January, Microsoft said that it had shipped 2 million of its phones through December -- to retailers.

"Windows Mobile may be a touchy subject in this report given the company's sales claims, which seemed to reflect copies shipped more than actual copies sold," Charles King, principal analyst at tech research shop Pund-IT, said in an email to TheStreet. While Apple and Google regularly supply the numbers of new phones running their software, Microsoft has so far demurred.

"Windows Phone 7 is off to a solid start," Bill Koefoed, Microsoft's investor relations chief, said on the conference call with analysts last quarter. He noted that the firm has signed up 24,000 developers to build out the system's apps menu, but that didn't give any sort of picture of Windows Phone 7's reception with consumers or enterprise users.

Hope for Microsoft and mobile lies in its just-inked partnership with the world's largest smartphone player Nokia (NOK), which will see Windows Phone 7 as the primary operating system for its handsets coming sometime in 2012. Research firm Gartner even predicts that the deal will propel Microsoft from its current fifth place to second in smartphone OS market share -- five years from now.

The PC Market Conundrum

Despite recent research that worldwide PC shipments are falling -- Gartner reported a decline in PC unit growth of about 1.1%, while IDC posted a 3.2% decline -- Intel's (INTC) robust results last week painted a different picture: Its PC client group registered a 17% year-over-year increase in sales. That's positive news for Microsoft and its core Windows market, where continued enterprise PC spending should offset consumer weakness.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs