Microsoft ( MSFT - Get Report) will report earnings on Thursday, giving analysts about four days to get those notes out to investors telling them what to expect. Merrill Lynch's blue-chip analyst Henry Blodget came out with a list of his expectations this morning. It will be a tough quarter, one made tougher when compared to the gangbuster business that Microsoft did last year.

"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," he wrote. "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 Blodget, won't affect the bottom line earning 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 revenue comes in lower than expected.

But 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 -- 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, since Microsoft is at the mercy of an uncertain macroeconomic environment and crumbling PC demand.

If pressed on the issue, the analyst would say that fiscal 2002 would come in between $1.70 and $1.80 a share, showing just about zero growth for the company. Microsoft will need to dodge some bullets in the next few quarters -- not just PC-related ones, either.

"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."

Microsoft fans, wait until Thursday. Cubs fans can continue waiting until next year.

The Cheap Shot

Goldman Sachs analyst David Fleischer lowered his rating on NiSource ( NI - Get Report) to market outperform from the U.S. recommended for purchase list based purely on stock price. This is another downgrade based on the dreaded valuation call -- that is, changing one's rating based on the price of a stock rather than making a change based on fundamental issues.

"Near-term upside potential has diminished because of higher interest expense than initially projected, a possible modest electric rate cut and modestly warmer weather in the first quarter," Fleischer wrote.

The analyst said the company had reached his near-term price target, warranting the action. Indeed, NiSource, which closed Thursday's trading session at $31.04, has rallied back from a February selloff and is about a buck and a half away from a 52-week-high.

Du Hast DuPont?

Looking for some guidance ahead of DuPont Photomask's ( DPMI) earnings release on Wednesday? This just in, courtesy of Goldman Sachs' Hwee-Kwan Chua:

"We maintain a cautious stance as slowing design activity, particularly for the non-leading edging chips, slows down photomask demand," the analyst wrote to investors in a note this morning. Chua expects the company to earn 53 cents a share, well off the 57-cent consensus and at the absolute bottom of earnings guidance provided by DuPont Photomask.

And with the company expected to miss estimates -- at least at Goldie anyway -- what else should you be looking for in the company's release? Look for a company plan to deal with the problem of sliding sales. "It will be important for DuPont Photomask to address its capital expenditure plan and cost reduction efforts as its sales growth is likely to decelerate over the next few quarters."