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Don't Bury Microsoft Just Yet

http://www.fool.com/investing/value/2010/10/29/dont-bury-microsoft-just-yet.aspx

Rick Aristotle Munarriz
October 29, 2010

It's fashionable to bash Microsoft (Nasdaq: MSFT  ) these days, but now it's time to let the world's largest software company sashay down the runway.

Mr. Softy did post better than expected results last night. Revenue climbed 25% to $16.2 million, with earnings per share soaring 55% to $0.62 a share. These are eye-rubbing tallies, but keep in mind that last year's fiscal first quarter was sandbagged. Include the revenue and net income deferrals related to Windows 7 upgrade and sales in anticipation of its debut last October, and revenue and earnings per share would have only grown by 13% and 19%, respectively.

Then again, the way folks have been hating on Microsoft these days -- Pacific Crest's Brendan Barnicle became the latest to downgrade the tech giant earlier this week -- one may be surprised to find Microsoft growing at all!

With or without the deferrals, analysts were still low-balling Microsoft's potential. Wall Street was looking for a profit of $0.55 a share on $15.8 billion in revenue.

Revenue grew in all five of Microsoft's divisions, but it's not perfect.

  • Bing is growing market share -- and its deal to handle Yahoo!'s (Nasdaq: YHOO