Microsoft Earnings: They’re Good

By Matt Phillips

Microsoft shares are getting a tidy afterhours lift of about 1.5%, after the company beat top and bottom line expectations in its first-quarter earnings report.

EPS of 62 cents a share bested the 55 cents analysts had expected. Top-line sales were $16.195 billion, better than the $15.80 billion analysts had expected.

Microsoft has been taking part in the recent rally, rising roughly 11% since the end of August, versus the roughly 13% rise for the S&P 500. In fact, despite its reputation as something of a plodding behemoth, it’s interesting to note that MSFT has pretty much kept pace with the S&P ever since the March 2009 market lows. The shares are up about 72% since then, versus 73% for the S&P. The S&P tech sector has done somewhat better over that period, up about 91%.

Citigroup analysts offered a snap take on the earnings results not long ago, noting the report seems to suggest stronger than expected business spending on PCs. Here’s what they’re listening for on the call:

1) Dynamics of Client business (corporate refresh, consumer weakness, tablets)
2) Commentary on Enterprise annuity spending
3) Early data points of new consumer products (Mobile, Kinect)
4) Outlook for Yahoo! impact to numbers
5) Strategic direction following departure of Ray Ozzie.