Microsoft May Boost Dividend This Fall: Analyst

Investors will be attracted to Microsoft if it raises its dividend over 3 percent, but don't expect to hear that Wednesday night during the company's earnings report, said Walter Pritchard, director and software analyst at Citi.

"That’s more of a fall announcement,” Pritchard told CNBC. “You’ll see a bump in the dividend [in the fall], but it’s unlikely to be a focus tonight.”

Microsoft is scheduled to report fiscal third-quarter earnings after-the-bell Thursday. Analysts expect the tech giant to report earnings of 56 cents a share on revenue of $16.19 billion, according to a consensus from Thomson Reuters.

Pritchard said he is concerned about the "large overhang" over the Microsoft Windows business due to non-PC devices that have been selling well lately.

“[However,] it's an issue that's hard to be resolved in an earnings report—it’s something that comes with product introductions later on in the year,” said Pritchard.

As consumers continue to flock to Apple’s iPad, it’s important for Microsoft to step up its game on the tablet front, said Pritchard.

“They’ve got Windows Next (a tablet-friendly Windows 8 OS) coming sometime in 2012 and that in terms is their entry into the tablet market,” he explained. “You’ll probably see a beta version of that product sometime in the fall and that will be the next milestone for that business and that issue.”

Pritchard has a $35 price target on the Dow component.


Scorecard—What He Said:

  • Pritchard's Previous Appearance on CNBC (Mar. 24, 2011)


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Pritchard has investment banking clients.

Citi has received compensation from MSFT for products and services other than investment banking. Citi is a market maker in the publicly traded equity securities of MSFT.