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Microsoft Earnings: Bulls, Bears Each Have a Case

Thursday, 28 Apr 2011 | 12:10 PM ET

For Microsoft, is it the best of times or the worst of times? We'll find out after the bell, but bulls and bears can both cite numbers to make their case.

Microsoft Earnings
Microsoft Earnings

On the bearish side, consumer PC sales have been weak in North America and Western Europe, as shoppers begin to abandon netbooks in favor of tablets that don't run Microsoft software.

On the bullish side, Intel shrugged off that trend last week when its revenues came in a billion dollars above the street's consensus, citing strength in servers, corporate PC sales, and consumer PC sales in emerging markets like Brazil and China.

The trends Intel cited would seem to benefit Microsoft, too. That's certainly what investors have been hoping, as they've bid Microsoft stock up about 5 percent since Intel's report. The street's consensus calls for Microsoft to report EPS of 56 cents on $16.2 billion in revenue. Management lately hasn't been giving any guidance aside from full-year operating expenses.

For Microsoft to make or beat consensus, it's going to have to rely on strength in the business division that sells Office and related software, and on the server and tools business, which should have benefitted from the same tide that lifted Intel's server business.

Heather Bellini of ISI models it this way: about $4.4 billion for the Windows division, $5.2 billion for for the business division, $4 billion for server and tools.

One area where Microsoft won't get much help this quarter is the entertainment and devices division: The holiday quarter is where Xbox and Kinect tend to shine, and its Windows Phone 7 platform has not been beating expectations.

Questions? Comments? TechCheck@cnbc.comAnd you can follow Jon Fortt on Twitter @jonfortt

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