Merrill Lynch's

Henry Blodget expects

Microsoft

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to meet its earnings targets when it reports financial results on Thursday, but he said the software giant could miss its revenue goals.

"Due to cutbacks in general IT spending, and soft PC sales in particular, we estimate that revenue will be approximately $6 billion, less than the original target of $6.3 billion to $6.4 billion," Blodget wrote this morning. "This target, established on the company's January earnings call, represents 12% year-over-year growth off of a tough 23% year-over-year comparison. We believe actual revenues will be closer to our current $6.0 billion estimate." The top line number, the $6 billion expected by Blodgett, won't affect the bottom line earnings estimate range given by the company back in January. The analyst still expects the company to hit its original earnings target between 42 and 43 cents a share -- even if revenues come in lower than expected.

Even more crucial than the current situation is Microsoft's future. Expect the usually tight-lipped company to say a little bit more this time around about its future outlook. These would be the first major comments from the company since January. Blodget thinks the company won't be able to provide much in the way of concrete guidance, however, since Microsoft is at the mercy of an uncertain macroeconomic environment and still-crumbling demand for new computers.

Blodget said he thinks fiscal 2002 earnings would come in between $1.70 and $1.80 a share, showing just about zero growth for the company. And Microsoft will need to dodge some bullets in the next few quarters. "In addition, lower investment income, due to falling valuations for tech and telecom companies, could knock an additional nickel from earnings per share," he wrote. "Finally, we expect operating margin to decline slightly, as high margin PC software declines as a percentage of total revenues and as price competition heats up in Microsoft's enterprise businesses."