What to Watch for in Microsoft Earnings

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Microsoft Corp. (NASDAQ: MSFT) is set to report its fiscal first-quarter earnings Thursday after the market closes. Thomson Reuters has consensus estimates of $0.49 in earnings per share and $22.02 billion in revenue. In the same period of the previous year, the tech giant posted earnings of $0.62 per share and $18.53 billion in revenue.

Looking ahead to the second quarter, the consensus estimates are for $0.75 in earnings per share and revenue of $27.87 billion.

The 50-day moving average acted as support for Microsoft for the first quarter. Moving into October, shares crossed under the 50-day moving average, which read at $45.50. As earnings draw closer the stock is testing that average. The 200-day moving average is now at $41.03.

Options traders do not seem to be looking for any major move for some reason. The closest put and call options indicate that the options traders are braced for only a move of about $1.00 in either direction, or just over 2% on the outside. Early trading on Thursday was skewed more to the put options, indicating that investors might be taking out insurance policies ahead of the report.

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Microsoft is a top large-cap value technology stock that rated Outperform at UBS, as of October 21. It offers investors solid growth and income. While posting strong earnings for the second quarter, Microsoft also announced huge layoffs of up to 17,000 employees as a result of the Nokia handset purchase this summer, and it continues to wring costs out of the system. UBS hinted that expectations are solid.

Microsoft was also featured as one of the 20 most profitable companies in the world.

Microsoft shares traded up less than 1% at 44.54 in the first hour of trading Thursday. Shares have a consensus analyst price target of $48.31 and a 52-week trading range of $33.57 to $47.57. The market cap is near $369 billion.