All trading involves risk. Losses can exceed deposits.

Microsoft prepared for weaker numbers

Longer-term issues continue to hang over Microsoft.

All trading involves risk. Losses can exceed deposits.
Microsoft logo
Source: Bloomberg

On Thursday 23 October, Microsoft is due to post its third-quarter figures after the US markets close. Markets are expecting the adjusted earnings per share to drop from last quarter's $0.58, to $0.53. Sales are also expected to be a little softer, falling from $23.38 billion to $22.004 billion. The consequence of these weaker figures is the pre-tax sales, which are expected to come in at $5.432 billion off from the $6.577 billion in the second quarter.

Whether involved in hardware or software, computer companies are conscious that migration away from the personal desktop computer to laptops, tablets and smartphones continues to gain pace. Microsoft Windows is just over a year away from celebrating an anniversary of 30 years. Almost since its inception in 1985, it has had the majority of the market share in desktop devices and in its varying forms still holds over 90% of this market. This dominance is diminished down to just a 2.38% market share of the mobile phone market.

Microsoft is in the final stages of being able to launch Windows 10 but this masks a bigger question for the company: where will it focus next? A wider range of applications has been mooted, and obtaining a larger slice of the cloud business could also happen.

Recent market weakness has seen the shares break below the 50- and 100-day moving averages. This selloff does feel a little overdone and the 200-DMA has been supportive over the last 18 months. Although longer-term questions hang over the company they are not imminent enough to see the $41.24 200-DMA being broken just yet.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts