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Mr. Market Ignores Microsoft's Industry Clues

Software giant Microsoft (Nasdaq: MSFT  ) reported third-quarter results last night and share prices jumped 5% today. The actual results were good but hardly a blowout: $0.60 of non-GAAP earnings per share on sales of $17.4 billion beat analyst targets by 3% and 1%, respectively. CEO Steve Ballmer seems to think of this quarter as a transitional period: "We're driving toward exciting launches across the entire company, while delivering strong financial results," he said.

Total revenue inched up by 6% year over year, driven by strong sales of server-side tools like SQL Server and the Office 2010 suite, but held back by timid Windows sales. That's hardly a surprise: Consumers and enterprises are holding back on buying Windows 7 upgrades with Windows 8 hovering on the horizon.

The powerful 14% revenue surge in the server and tools segment goes hand in hand with equally strong software sales reported by IBM (NYSE: IBM  ) earlier this week. As the true bellwethers of enterprise software agree that the market is healthy, we should expect the string of good reports from high-quality software companies to continue.

Over the next couple of weeks, we'll see updates from BMC Software (Nasdaq: BMC  ) , CA Technologies (Nasdaq: CA  ) , and Teradata (NYSE: TDC  ) . All of these software specialists have solid reputations along with three or more CAPS stars out of five, and two of them are official Foolish newsletter recommendations. None of these stocks moved an inch on Microsoft's good news after-hours and saw small gains today. That could be a mistake -- or a wide open buy-in window.

Add this trio of potential analyst busters to your Foolish watchlist to learn more about them. Microsoft and Big Blue set the stage, now you get to pick the winners. Enterprise computing is kind of a big deal right now thanks to the impending Windows 8 release alongside the unstoppable rise of Big Data and business intelligence.

Fool contributor Anders Bylund holds no position in any of the companies mentioned. Check out Anders'holdings and bio, or follow him on Twitter and Google+. The Motley Fool owns shares of IBM, Microsoft, and BMC. Motley Fool newsletter services have recommended buying shares of Microsoft and Teradata, as well as creating a bull call spread position in Microsoft. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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