Microsoft Earnings Imminent

S&P 500 (NYSE:SPY) component Microsoft (NASDAQ:MSFT) will unveil its latest earnings on Thursday, October 18, 2012. Microsoft develops, licenses, and supports a range of software products and services for a variety of computing devices.

Microsoft Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 57 cents per share, a decline of 16.2% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 67 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 60 cents during the last month. Analysts are projecting profit to rise by 8.3% compared to last year’s $3.

Past Earnings Performance: The company’s quarterly results have come in above estimates for the last three quarters. Last quarter, the company booked net income of 73 cents per share versus a mean estimate of profit of 63 cents per share.

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A Look Back: In the fourth quarter of the last fiscal year, the company swung to a loss of $492 million (5 cents a share) from a profit of $5.87 billion (68 cents) a year earlier, but beat analyst expectations. Revenue rose 4% to $18.06 billion from $17.37 billion.

Stock Price Performance: Between September 14, 2012 and October 12, 2012, the stock price dropped $2.01 (-6.4%), from $31.21 to $29.20. The stock price saw one of its best stretches over the last year between August 2, 2012 and August 9, 2012, when shares rose for six straight days, increasing 4.5% (+$1.31) over that span. It saw one of its worst periods between November 11, 2011 and November 25, 2011 when shares fell for 10 straight days, dropping 9.7% (-$2.61) over that span.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.6 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 2.94 in the third quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 24.9% to $32.69 billion while assets rose 10.7% to $85.08 billion.

Key Stats:

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 7.3% in the first quarter of the last fiscal year, 4.7% in the second quarter of the last fiscal year and 6% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year of the last fiscal year.

Wall St. Revenue Expectations: Analysts predict a decline of 5.3% in revenue from the year-earlier quarter to $16.45 billion.

Analyst Ratings: With 20 analysts rating the stock a buy, none rating it a sell and 10 rating the stock a hold, there are indications of a bullish stance by analysts.

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(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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