Microsoft Reports Earnings Today: Expect Slow PC Sales To Hurt

Steve Ballmer thoughtful

[credit provider=”AP”]

Microsoft posts earnings for the last quarter of 2011 today, and we’ll be covering it live.Analysts are expecting record revenue but flat profits from last year, thanks to declining PC sales.

Last week, Microsoft warned that PC sales were even lower than it had forecast in October — the company was expecting around 5% growth previously, but now expects a drop of at least 1%, maybe more.

That means a crummy quarter for Windows, where revenues have been flat or down for the last year. The drop could affect sales of Office, Microsoft’s second-biggest product, as well. Consumers and small businesses often purchase Office with new PCs.

The Xbox business had a bang-up quarter, though, with more than 1 million units sold in a single week near Thanksgiving — an all time record. That’s great for revenue, but not so great for earnings, as hardware like the Xbox and Kinect is more expensive to produce than software like Office or Windows.

We’ll also be looking for new statistics on Office 365, Microsoft’s latest answer to Google’s Gmail and Apps business, which launched last spring.

Here are the consensus estimates for revenue and EPS, plus expected revenue by business unit courtesy of Brent Thill at UBS.

  • Revenue: $20.93 billion, +5% from last year 
  • EPS: $0.75, -1%
  • Windows revenue: $4.95 billion, -2%
  • Business Division (mostly Office) revenue: $6.10 billion, +1%
  • Server & Tools (infrastructure software) revenue: $4.85 billion, +10%
  • Entertainment & Devices (Xbox, mobile) revenue: $4.40 billion, +20%
  • Online (Bing, MSN) revenue: $795 million, +15%