Microsoft’s Stock Firm as Earnings are on Deck Next Week
Microsoft‘s (NASDAQ:MSFT) stock has inched about 5% higher in the last week following a series of positive announcements. Last week, the European Union finally cleared Microsoft’s $8.5 billion Skype acquisition which led to a small bump in its stock price. The broader market rally helped lift the stock due to the overall higher market confidence which was buoyed by news of the improving situation in Europe as leaders scramble for a comprehensive rescue plan.
We expect Microsoft’s stock price to remain firm as its Q1 FY12 earnings release date nears in anticipation of modest overall revenue growth over the last quarter. We expect Windows sales to continue their mild decline, but it will be compensated by the expected rise in revenues from the Entertainment and Devices division, thanks to an increase in sales of the Xbox gaming console and the Kinect motion gaming add-on.
In the coming quarter, we expect Windows Phone device sales to increase significantly, though they are unlikely to contribute to any major increase in Microsoft’s overall revenues. The launch of Microsoft’s Windows 8 is still too far off into the future, but we should see a boost in Windows sales numbers following the launch.
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We have a $28 Trefis price estimate for Microsoft, which stands nearly 5% above its current market price.
Check out our complete analysis for Microsoft.
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