Will Microsoft miss earnings for the third year in a row?

Tech giant Microsoft (MSFT) will report FQ4 earnings for the 2015 fiscal year tomorrow after the markets close. With the Estimize consensus set at $.55 and the Wall Street consensus at $.56, a delta to consider when looking into the company’s past performance in the fourth quarter of its fiscal year.


Historically, Microsoft has reported lower earnings in its fourth quarter. Projections by Wall Street analysts would put their year-over-year EPS growth at -6%, although the more optimistic Estimize consensus puts the community’s earnings growth at 15%.

Like many other stocks, Microsoft has been very volatile around its earnings. After reporting earnings and missing both the Wall Street and Estimize consensus for the past two fourth quarters, the stock price has been smashed, nearly 12.5% and 4% in 2013 and 2014 respectively. The following chart, from ChartIQ powered by Estimize earnings data, shows the stock’s price action after beating earnings (green) and missing earnings (red) for both the Wall Street and Estimize consensus.


Microsoft has experienced some problems recently in its Devices and Consumer (D&C) division. With revenues dropping to $3.48B, a decrease of nearly 24% does not bode well for the company’s bottom line. Revenues from the Windows phone have also decreased, and Microsoft is attempting to counteract this with growth in its commercial cloud services.

Microsoft Azure, the company’s cloud computing platform, is an online service for hosting websites, managing data, performing business analytics, and messaging. As of last quarter, the platform experienced 106% growth year-over-year. Microsoft will look to continue its expansion as it follows other cloud service providers, like Amazon (AMZN) and Salesforce (CRM).

Undoubtedly, Office 365 has been Microsoft’s most successful product to date. Estimates put its usage by PCs at over 90%. Subscribers to Office 365 should increase as well when Microsoft posts earnings tomorrow. Be sure to post your estimates for Microsoft here at Estimize and pay close attention to the company as it looks to beat Estimize and Wall Street.

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