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Joe Terranova: In MSFT, Further Upside Appears Limited

”I don’t think there’s enough here to really catapult Microsoft stock much further,” says Fast trader Joe Terranova after looking through the latest earnings.

“I don’t see a lot of upside after $29,” says trader Guy Adami in support of Terranova. "But I don't see a lot of downside beyond $26.50."

Those are the gut reactions from two of our top traders after parsing through Microsoft earnings.

Largely the numbers showed profits increased by a greater than expected 30%, helped by strong sales of Microsoft Office software and Xbox game console but also revealed that profit from its core Windows products, fell due to soft personal computer sales.

It's that latter point that emboldens the Microsoft bears.

They say it's another sign of waning growth in the overall PC market - and that's particularly troublesome for Microsoft because Windows comes pre-installed on most PCs.

"All eyes are on Windows and how they are ultimately going to extend this franchise in the future, as the PC business continues to lose share to the tablets," says Josh Olson, technology analyst at money manager Edward Jones.

By the numbers Mr. Softy posted net profit of $5.87 billion, or 69 cents per share, compared with $4.52 billion, or 51 cents per share, in the year-ago quarter.

That easily beat Wall Street's average estimate of 58 cents, according to Thomson Reuters. Sales rose 8 percent to $17.37 billion, ahead of analysts' average estimate of $17.23 billion.

Trader Karen Finerman is much more constructive on this stock. "They had decent revenue growth," she says, and "Bing search was good." She finds valuations compelling.

CNBC Contributor Ron Insana is also positive. "What I like about Microsoft is these one-time ongoing dividends that they like to pay out which are rather hefty and get favorable tax treatment," he says. "To me it's still an interesting stock."




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Trader disclosure: On July 21, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami Owns (AGU); Adami Owns (C); Adami Owns (GS); Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Finerman's Firm And Finerman Own (AAPL); Finerman's Firm owns (BAC) leaps and Finerman Owns (BAC); Finerman's Firm owns (JPM) leaps and Finerman Owns (JPM); Finerman’s Firm and Finerman own (MSFT); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (MDY); Finerman's Firm Is Short (SPY); Finerman's Firm Is Long S&P 500 Putsl Finerman's Firm Is Long Russell 2000 Puts; Terranova owns (XOM); Terranova owns (HAS); Terranova owns (DIS); Terranova owns (WFM); Terranova owns (LULU); Terranova owns (MSFT); Terranova owns (TM); Terranova owns (JWN); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (MA); Terranova owns (BX); Terranova owns (GS); Terranova owns (DAR); Terranova owns (CAT); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (F); Terranova owns (CVI); Terranova owns (IBM); Terranova owns (FCX)

For Brian Kelly
Accounts Managed By Brian Kelly Capital Own (TOL) calls
Accounts Managed By Brian Kelly Capital Own (MCP) calls
Accounts Managed By Brian Kelly Capital Own (INTC)
Accounts Managed By Brian Kelly Capital Own (QCOM)
Accounts Managed By Brian Kelly Capital Own (GDXJ)
Accounts Managed By Brian Kelly Capital Own (SLV)

For Joe Terranova
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Terranova is Chief Market Strategist of Virtus Investment Partners, LTD
Virtus Investment Partners Owns More Than 1% Of (ABAX)
Virtus Investment Partners Owns More Than 1% Of (AMKR)
Virtus Investment Partners Owns More Than 1% Of Building Materials Holdings
Virtus Investment Partners Owns More Than 1% Of (CASS)
Virtus Investment Partners Owns More Than 1% Of (CSVI)
Virtus Investment Partners Owns More Than 1% Of (EXR)
Virtus Investment Partners Owns More Than 1% Of (FCFS)
Virtus Investment Partners Owns More Than 1% Of (KRC)
Virtus Investment Partners Owns More Than 1% Of (LDR)
Virtus Investment Partners Owns More Than 1% Of (LHO)
Virtus Investment Partners Owns More Than 1% Of (NRCI)
Virtus Investment Partners Owns More Than 1% Of Sun Pharmaceutical Industries Ltd
Virtus Investment Partners Owns More Than 1% Of (DBV)
Virtus Investment Partners Owns More Than 1% Of (RLI)
Virtus Investment Partners Owns More Than 1% Of (XLB)
Virtus Investment Partners Owns More Than 1% Of (XLV)
Virtus Investment Partners Owns More Than 1% Of (XLP)
Virtus Investment Partners Owns More Than 1% Of (XLE)
Virtus Investment Partners Owns More Than 1% Of (XLF)
Virtus Investment Partners Owns More Than 1% Of (XLI)
Virtus Investment Partners Owns More Than 1% Of (XLK)
Virtus Investment Partners Owns More Than 1% Of (XLU)
Virtus Investment Partners Owns More Than 1% Of (SUBK)
Virtus Investment Partners Owns More Than 1% Of (WDFC)
Virtus Investment Partners Owns More Than 1% Of (YDNT)
Virtus Investment Partners Owns More Than 1% Of Domino's Pizza UK & IRL PLC


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