- Associated Press - Wednesday, July 21, 2010

SEATTLE (AP) - Microsoft Corp. is scheduled to report fiscal fourth-quarter earnings after the market closes Thursday.

WHAT TO WATCH FOR: Confirmation that businesses are replacing servers and employee computers at a decent clip, after a major slowdown during the worst of the recession.

Intel Corp. recently reported its best quarter ever, bolstered by strong demand for the microprocessors in servers and computers. Computer makers shipped about 22 percent more PCs in April through June according to the market research group IDC.

If it’s the case that corporations are indeed spending more on technology, that should give a lift to Microsoft’s results. The vast majority of Microsoft’s revenue and profit come from the divisions that make Windows PC and server software and business software such as the new Office 2010. And business customers are more profitable than consumers because Microsoft sells them higher-priced versions of its programs.

Caris & Co. analyst Sandeep Aggarwal wrote in a research note on July 9 that Microsoft’s stock has been underperforming as investors worry about the European economy and the challenge from Apple Inc.’s iPad tablet computer, among other things.

Aggarwal believes strong business and consumer Windows 7 sales, progress on the deal to power Yahoo Inc.’s search and the launch of Office 2010 outweigh those worries.

WHY IT MATTERS: Microsoft was the big winner as personal computers found a place at home and in schools and offices, bringing Windows and other software with them. Microsoft’s challengers, including Google Inc. and Apple Inc., are now focused on programs that work over the Internet and that turn mobile phones into excellent on-the-go computers. While analysts worry about Microsoft’s ability to shift to Web computing, challenge Google in Web search and advertising and successfully relaunch the Windows mobile phone brand, strong Windows, Office and server results will show that Microsoft is definitely not on the brink of extinction.

WHAT’S EXPECTED: Analysts surveyed by Thomson Reuters are looking for net income of 46 cents per share on $15.27 billion in revenue.

LAST YEAR’S QUARTER: Microsoft earned 34 cents per share on $13.1 billion in revenue.

Copyright © 2016 The Washington Times, LLC.

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