Microsoft Earnings Come Up Just Short (MSFT)

Microsoft Corporation (NASDAQ: MSFT) just posted earnings. The software and tech behemoth posted $0.46 EPS  and $15.8 in revenues. 

First Call’s estimates for the quarter are $0.47 EPS on $15.65 Billion in revenues. 

The company also gave guidance for next quarter of $0.47 to $0.48 EPS on $14.7 to $14.9 Billion in revenues, while estimates are $0.49 EPS on $15.06 Billion in revenues.

For Fiscal June-2009, the company is forecasting $2.12 to $2.18 EPS vs.$2.16 estimates on revenues of $67.3 to $68.1 Billion, compared toestimates of $2.16 EPS and $67.3 Billion in revenues.

The company also noted a 15% headcount cost increase based upon morehires.  It now records over 180 MILLION licenses sold for WindowsVista.  The company said revenue growth was driven by the 2007Microsoft Office system, server software, and Xbox 360 consoles andgames. 

CFO Chris Liddell noted, "…despite difficult economic conditions, wewill build…. and expect to deliver another year of double-digitrevenue and earnings growth in fiscal year 2009."

Shares closed up 0.9% at $27.52 in regular trading but shares are downalmost 5% at $26.20 in the initial reaction in after-hours trading.

This may come up as a tad short on the earnings numbers, but if you trust the earnings projections you have the world’s software leading behemoth trading (based on $26.20 after-hours price of shares) at 12.5-times forward earnings.  That is the lowest forward P/E perhaps ever seen on this stock and something that value managers will be discussing tomorrow.

As a reminder, Bill Gates isn’t going to be on this call.

Jon C. Ogg
July 17, 2008