Microsoft (NASDAQ:MSFT) will release its quarterly report on Thursday, and investors expect that the tech giant will continue its string of modest earnings growth. Yet even as Apple (NASDAQ:AAPL) has seen its growth pace slow somewhat, Microsoft earnings will almost certain trail well behind the expansion that Google (NASDAQ:GOOGL) showed in its quarterly report last week. That will raise the same questions as always about whether Microsoft can reinvent itself as a viable threat to Google and Apple.

For all of the criticism it gets, Microsoft remains a huge cash cow, and its dependable revenue compares well against many other tech companies that are struggling to keep their sales figures up. The company has thus far maintained much of its dominance in its core operating system and office software suite niches, and Microsoft has also looked toward higher-growth areas like cloud computing, data analytics, and mobile devices for stronger profits. Yet Microsoft remains a distant third behind Apple and Google in the key smartphone space. Let's take an early look at what's been happening with Microsoft over the past quarter and what we're likely to see in its report.

Stats on Microsoft

Analyst EPS Estimate


Change From Year-Ago EPS


Revenue Estimate

$17.78 billion

Change From Year-Ago Revenue


Earnings Beats in Past 4 Quarters


Source: Yahoo! Finance.

Can Microsoft really grow anymore?
In recent months, analysts have pulled back on their views on Microsoft earnings, cutting September-quarter estimates by $0.03 per share and full-year fiscal 2014 projections by twice that amount. The stock has performed well, though, rising 12% since mid-July.

This quarter has been a huge one for Microsoft, with several major announcements that will affect its long-term future. In August, CEO Steve Ballmer announced that he would retire once the company picked a replacement chief executive officer, sending shares higher as investors cheered the possibility of a new leader who could make more of Microsoft's assets. Then last month, Microsoft bought Nokia's handset business, redoubling its commitment to the mobile market but raising questions about whether the purchase represented the right strategic direction for Microsoft.

Even with big changes coming, Microsoft still has to face the challenge that in mobile, it's being hemmed in on both sides. Apple continues to have the reputation as being the go-to provider of high-end tablets and smartphones, with its recent iPhone 5c/5s launch having once again proven the consistent demand for Apple products even at high prices and in the absence of what many would call major innovations from past models. Meanwhile, devices running Google's Android mobile operating system span the spectrum from high-end to low-cost, making it difficult for Windows-based devices to find their ideal niche.

Moreover, Google and Apple are attacking Microsoft's office-software dominance. Google has made its cloud-based Drive suite of document, spreadsheet, and presentation software freely available on both standard computers as well as mobile devices, providing a limited but often adequate substitute for Microsoft Office to many users. With Apple having made a similar offer recently to give iPhone and iPad users free use of its iWork productivity software, Microsoft might soon find it difficult to sustain pricing power for Office.

The key for Microsoft will be to demonstrate that products that resemble laptop-mobile hybrids have greater value than competing mobile devices, justifying higher price tags and therefore producing greater margins. So far, that theory hasn't resonated with customers, but the launch of the Surface Pro 2 will show Microsoft whether it can change their minds about the concept.

In the Microsoft earnings report, watch to see how the company's leadership search is progressing and what strategic direction Microsoft plots more broadly against Google and Apple. With low expectations for success in its battle with its two rivals, Microsoft might well give shareholders a nice surprise even simply by reporting anything better than a worst-case scenario.

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Fool contributor Dan Caplinger owns shares of Apple. The Motley Fool recommends, Apple, Facebook, and Google. The Motley Fool owns shares of, Apple, Facebook, Google, and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.