Microsoft (MSFT) reports FQ3 earnings after the close. The conference call will start at 5:30 pm EST. We will analyse the results and commentary live here, beginning at 4PM ET.
Microsoft’s last two quarters have been blockbusters, and the Street is expecting another one. Wall Street’s printed expectations, meanwhile, are in line with the company’s conservative guidance, which could set the stage for a blowout. Expectations are high and the stock has already run up, but a great quarter could send Microsoft’s stock still higher, despite the dead-weight of the Yahoo deal. This would raise the value of Microsoft’s bid for Yahoo, thus providing the face-saving carrot necessary to get Yahoo to the negotiating table. Microsoft’s outlook and commentary about the U.S. and global economy will also obviously be critical–for the company, tech sector, and market.
After modelling the quarter, we believe there is significant upside to consensus revenue and EPS, as well as to the EPS whisper of $0.46. The consensus Street margin assumptions strike us as low, and a little extra revenue and leverage would drive an EPS blowout.
We will cover the earnings call live and will update our Microsoft spreadsheet as soon as the numbers come out.
Consensus for key metrics:
- Revenue of $14.5 billion (vs. guidance range of $14.3-$14.6 billion). Upside
- EPS of $0.44 (mid-point of guidance range of $0.43-$0.45) Whisper is $0.46. Upside to both.
Approximate consensus divisional revenue breakdown:
- Client revenue: $4.4 billion, -18% (anniversary of Vista boom) Upside.
- Server/Tools revenue: $3.2 billion, +15%
- Online Services revenue: $900 million, +125% (driven by acquisition)
- MBD revenue: $4.8 billion, + 1% (upside)
- Entertainment revenue: $1.2 billion, +30%
- June: $15.56 billion / $0.48
- FY 2008 (June): $60.2 billion / $1.87
- FY 2009 (June): $66.5 billion / $2.10
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