Slipping search share,
Savior Vista.
Redmond rumbles;
Reverse the falling.
Thursday night, the world's biggest software company reports earnings. That would be Microsoft
What analysts say:
- Buy, sell, or waffle? Forty analysts follow Mr. Softy's every move. Twenty-nine of them are buying the stock, two are selling, and the other nine are holding the middle ground. In our Motley Fool CAPS investor community, it's a two-star stock based on input from more than 5,200 users.
- Revenue. Management guidance points to a range between $13.7 billion and $14 billion, and the analyst consensus falls squarely inside that spread. $13.9 billion would be a 27% gain over last year's $10.9 billion.
- Earnings. Again, Wall Street sticks tightly to the company's guidance with a $0.46 per-share consensus -- at the top of an official $0.45-$0.46 range. A year ago, Redmond squeezed out $0.32 of profits per share.
What management says:
A couple of weeks ago, Microsoft created a new board seat for Netflix
What management does:
It ain't easy being Microsoft these days, judging from the margin and growth trends here. Of course, what you're looking at probably represents rock bottom, as the upcoming report will be the first time Office 2007 and the consumer versions of Windows Vista have a chance to contribute to sales and earnings. Before that, many prospective customers held off on buying office suites and operating systems, knowing that a shiny new version was on its way.
And while it would be fun to bash erstwhile Apple
|
9/2005 |
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
|
|---|---|---|---|---|---|---|
|
Gross |
85.4% |
84.9% |
83.4% |
82.7% |
82.2% |
79.4% |
|
Operating |
42.9% |
41.6% |
38.9% |
40.7% |
39.9% |
36.7% |
|
Net |
31.9% |
31.6% |
31.6% |
28.5% |
28.5% |
25.9% |
|
FCF/Revenue |
39.8% |
35.2% |
32.8% |
29% |
27.3% |
25.9% |
|
YOY Growth |
9/2005 |
12/2005 |
3/2006 |
6/2006 |
9/2006 |
12/2006 |
|---|---|---|---|---|---|---|
|
Revenue |
6.7% |
7.5% |
9.6% |
11.3% |
12.4% |
11.4% |
|
Earnings |
59.2% |
30.6% |
19.8% |
2.8% |
0.5% |
(8.8%) |
One Fool says:
While the entertainment division of Microsoft is moving closer to profitability after years of red ink, online services is doing a lobster-walk in the opposite direction. The segment formerly known as MSN can't seem to gain any traction with its efforts to dislodge Google
There's a persistent rumor that Microsoft might make a bid for a company like Yahoo! in order to buy the success it couldn't develop on its own. I'll believe that one when I see it, though Gatesville does command enough cash -- $28 billion -- to put a mostly cash deal of that magnitude within the realm of plausibility.
Microsoft is a Motley Fool Inside Value pick, while Netflix and Yahoo! both made it onto the Motley Fool Stock Advisor scorecard.
Fool contributor Anders Bylund is a Netflix shareholder, but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure will help you find the road ahead.
