Can Microsoft (MSFT) And AT&T (T) Save The Bull Market?

Of the earnings that will hit over the next week, none are as important as Microsoft (MSFT) and AT&T (T). Both have broad business which touch consumers and businesses worldwide. Both carry fairly high expectations for Q4 07 performance, and both are sophisticated enough to issue accurate 2008 guidance.

A look that the other large companies which report soon indicates that none of them is likely to help head off a further market slide. Their results are likely to be in line or below forecasts and their businesses tend to reach a more narrow part of the general economy than those of AT&T and Microsoft. Motorola (MOT), Apple (AAPL), Yahoo ! (YHOO), and Google (GOOG) will all announce in the next few days. So will Johnson & Johnson (JNJ).

Microsoft is nearly a perfect barometer of overall demand for tech, consumers electronics, and internet revenue. Its large Office franchise is a de factor index of enterprise IT spending. Analysts expect MSFT to post $.46 a share. If its Vista, Xbox, and Office franchises were strong at the end of the year and if the company puts up a number above $.48, it is a sign that the economy is not dead.

AT&T holds a similar place in the market. Its broadband, landline, and cellular businesses touch over 150 million customers, both consumers and businesses of all sizes. Its wireless business should be helped by the Apple (AAPL) iPhone. The company’s CEO last month said that the firm’s consumer landline business was a little soft. That has brought the stock down some, but he was not specific so the company could make or better projections.

Analysts expect $.71 from AT&T. If cellular had a strong quarter and business spending on telecom was steady, the company could make that number. If softness with the consumer was modest, it could beat it. AT&T could draw a line in the sand as to whether the economy is tapped out or not.

Douglas A. McIntyre