Microsoft Corp. reports fiscal first-quarter earnings on Thursday. The following is a summary of key developments and analyst opinion related to the period.
OVERVIEW: While retailers anxiously await word that the delayed release of Microsoft's next-generation operating system - Windows Vista - is on schedule to be delivered to businesses in November and to consumers in January, investors are most likely itching to hear exactly how many shares the company bought during the quarter that were not included in an aborted tender offer.
In August the world's largest software maker backed down from a plan to buy back $20 billion in stock through a Dutch auction, after having only bought $3.8 billion in shares.
The company added another $16.2 billion to the long-term program, though, bringing the total value of shares authorized for repurchase to $36.2 billion. The program extends through June 30, 2011.
Stock buyback plans help boost earnings per share by reducing the number of outstanding shares.
BY THE NUMBERS: Analysts polled by Thomson Financial expect the company to report, on average, earnings of 31 cents per share on $10.75 billion in revenue.
The company said in July it expects first-quarter earnings of 30 cents to 32 cents per share, on $10.6 billion to $10.8 billion in revenue.
ANALYST TAKE: Matrix USA director of research, Ivan Feinseth, expects the company to report sales roughly inline with estimates, and adds that investors will be listening for details about a variety of issues, including the initial inventory and shipments of Zune, Microsoft's so-called iPod killer, or portable music player; as well as the rollout plan for Microsoft's 2007 version of Microsoft Office software suite; and most importantly, for the delivery date for Vista.
Credit Suisse analyst Jason Maynard believes the company will report earnings inline with his estimate for 30 cents per share on $11 billion in revenue. He expects solid results, with potential upside helped by personal computer sales.
WHAT'S AHEAD: Looking forward, Maynard expects deferred revenue to increase in the second quarter, as the company issues upgrade coupons to consumers purchasing Vista-ready machines. The delay in recording revenue could push earnings of 4 cents to 5 cents per share to the third quarter, according to Maynard.
Bernstein Research analyst Charles DiBona expects the company to reaffirm previous guidance for full-year 2007 sales - back in July Microsoft projected 2007 sales of $49.7 billion to $50.7 billion - but thinks the company may need to tweak earnings guidance due to a lower-than-expected number of shares bought through its buyback plan. The company previously forecast 2007 earnings of $1.43 to $1.47 per share.
STOCK PERFORMANCE: Shares of Microsoft, which have traded between $21.46 and $28.70 over the last year, climbed roughly 17 percent during the quarter to a closing price of $27.35 on Sept. 29.
The stock recently traded around $28.30 on the Nasdaq.