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Microsoft reports earnings tomorrow (Thursday) after the market close.
The Microsoft stock price is down about 14% from its 52-week high of $50.05, which it hit Nov. 14. Most of the decline came following Microsoft's last earnings report in January, when disappointment over sales in the commercial division dropped MSFT stock 9.3% in one day.
Since then the MSFT stock price has not fully recovered, trading between $40 and $44. Microsoft stock closed Wednesday at $42.99.
If the Redmond, Wash.-based tech giant can show that its transition strategies toward the cloud and mobile are working, it won't need a dramatic earnings beat to move the MSFT stock price.
Microsoft, like longtime partner Intel Corp. (Nasdaq: INTC) and most PC makers, has suffered as PC sales have leveled off in recent years. Investors mainly want to know that Microsoft has a viable plan for future growth.
Here are the details on Microsoft's Q3 earnings…
What to Watch for in Q3 Microsoft Earnings
The numbers: Analysts are looking for earnings per share (EPS) of $0.51, which would be a 25% drop year over year. Only a huge beat will be enough to avoid the fifth straight quarter of year-over-year declines. The forecast for revenue is $21.1 billion, which would be a 3.4% increase over the revenue of $20.4 billion in Q3 of 2014. It would also be the fourth straight quarter of year-over-year revenue increases.
The last quarter: For Q2, Microsoft was in line with estimates on EPS, reporting earnings of $0.71 a share. That was, however, a 9% decline from the same quarter a year earlier. Revenue was $26.5 billion, just above expectations for $26.32 billion.
The stock: As noted earlier, the MSFT stock price is down from its highs of last fall. Microsoft stock fell 12.48% in the first quarter of 2015, and is down 7.3% in 2015. But MSFT stock is still up 8% over the past 12 months. Microsoft declared a quarterly dividend of $0.31 a share on March 10.
About the Author
Dave has been a journalist for more than 35 years, including 18 spent at The Baltimore Sun. He has worked as a writer, editor, and page designer at different times in his career. He's interviewed a number of well-known personalities - ranging from punk rock icon Joey Ramone to Apple Inc. co-founder Steve Wozniak.
Over the course of his journalistic career, Dave has covered many diverse subjects. Since arriving at Money Morning in 2011, he has focused primarily on technology. He's an expert on both Apple and cryptocurrencies. He started writing about Apple for The Sun in the mid-1990s, and had an Apple blog on The Sun's web site from 2007-2009. Dave's been writing about Bitcoin since 2011 - long before most people had even heard of it. He even mined it for a short time.
Dave has a BA in English and Mass Communications from Loyola University Maryland.