Microsoft's Street Views Descending After Q3 Results

A strong dollar and a weak market for personal computers may result in lower expectations for Microsoft Corporation (NASDAQ: MSFT) following its fiscal third-quarter earnings report after the bell Wednesday.

"Consensus estimates clearly need to come down," according to Wells Fargo's Jason Maynard, who cut his fiscal 2016 forecast, but upgraded the company to Outperform, citing its 7 percent stock price decline since January 1.

The Microsoft Situation

Microsoft, trading recently at $43.26, up $0.28 cents, is expected to post a 25 percent decline in third-quarter earnings to $0.51 cents, while revenue will grow about 2 percent to $21.06 billion.

Global PC sales fell between 5.2 percent and 6.7 percent during the first three months of 2015, according to recent estimates by Gartner Inc (NYSE: IT) and IDC.

Maynard "isn't expecting much" from the pending launch of Microsoft's latest Windows 10 operating system and doesn't expect it will move the stock.

Related Link: Microsoft Earnings: What Morgan Stanley Is Watching

Risks On The Horizon?

But Bank of America's Kash Rangan sees risk in the upcoming event.

"It's a big question," Rangan poses, asking how many consumers will choose a free upgrade versus a new computer. Rangan maintains an Underperform rating on Microsoft.

Deutsche Bank's Karl Keirstead and Morgan Stanley's Keith Weiss both maintained Hold ratings on Microsoft, citing weak PC sales an uncertainty surrounding billings growth related to its cloud services.

Contrastingly, CLSA's Ed Maguire reiterated an Outperform rating and said that, beyond foreign exchange worries and the PC market, Microsoft is "well-positioned" to providing business services related to the cloud.

 
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