After Google debacle, Microsoft’s so-so Q1 earnings look pretty perky

Microsoft CEO Steve Ballmer

Microsoft did not blow away the quarter but the fact that it nearly met expectations constituted good news after a rough week for tech stocks. Microsoft logged earnings per share (EPS) of $0.53 on revenue of $16 billion, missing estimates of $0.57 EPS on revenue of $16.4 billion. GAAP revenue was down 8 percent compared to the year-ago figure of $17.38 billion and EPS of $0.68.

This rather ho-hum news was actually a relief after Intel and IBM shares took it on the chin this week and the Google earnings pre-release debacle earlier on Thurday.

As is usual in a big upgrade year, Microsoft deferred revenue of $1.36 billion in revenue ($0.13 per share) to cover the transition to the Windows 8 operating system which will debut next week. Without the deferrals, EPS would have been $0.65 on revenue of $17.4 billion.

Intel’s earnings indicated that the appetite for PCs remains low and that bodes ill for Windows 8 — and Microsoft. No one needs a new operating system unless they buy a new PC and it sure doesn’t look like there will be a lot of new PCs selling next quarter. HP and Dell are also feeling this pain.

The consensus estimates for Microsoft’s first quarter ending September 30, fell from 60 cents a share to the current estimate of earnings of 57 cents a share over the past few weeks.


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