LOS ANGELES (AP) — Microsoft Corp. is expected to post higher earnings and revenue as its enterprise software business blunts a downturn in the market for personal computers. The software company based in Redmond, Wash., reports its fiscal fourth-quarter earnings on Thursday after the market closes.
WHAT TO WATCH FOR: The company may give an update on the uptake of Windows 8. It released a preview of an update, Windows 8.1, last month. A lackluster reception to the new touch-enabled operating system has been partially blamed for the decline in the PC market.
Research firm Gartner Inc. has said worldwide shipments of personal computers fell 11 percent to 76 million in the April-June period, the fifth-consecutive quarter of decline and the longest PC slump on record.
Sales of the Xbox 360 may also have slowed ahead of the release of its next-generation console, Xbox One, later this year.
But Microsoft's revenues are seen higher, thanks in part to business customers upgrading from Windows XP, which came out in 2001, to Windows 7, which came out in 2009.
Business customers are not upgrading to Windows 8 due to the lack of touch interfaces on most legacy computers and the disappearance of the "Start" button, according to BMO Capital Markets analyst Karl Keirstead, who polled Microsoft partners and resellers ahead of the earnings release.
There are also signs that the decline in PC sales may be abating. Citi analyst Walter Pritchard said better-than-expected U.S. shipments in the most recent quarter is an early sign that the PC market's decline is hitting a bottom.
WHY IT MATTERS: Microsoft provides the operating system for more than a billion personal computers worldwide. Its financial health is a barometer of the health of the technology industry. Its results also reflect changing consumer behaviors.
WHAT'S EXPECTED: Microsoft is expected to post earnings of 75 cents per share in the three months through June on revenue of $20.74 billion.
LAST YEAR'S QUARTER: Last year, Microsoft posted adjusted earnings 73 cents per share on revenue of $18.06 billion.