* Fiscal Q4 EPS expected $0.58 vs year ago $0.51
* Sales seen up 7 pct to $17.23 bln
* Follows strong results from Apple, IBM, Intel
* Concerns linger over strength of PC market
By Bill Rigby
SEATTLE, July 21 Microsoft Corp is
expected to post a 9 percent increase in fiscal fourth-quarter
profit on Thursday, helped by solid sales of its Windows and
Office mainstays, but investors may be distracted by evidence of
flickering computer sales, which are key to its success.
The world's largest software maker is set to follow Google
Inc , Apple Inc , and IBM in reporting
surprisingly good results as technology spending holds up
relatively well in an uncertain economy.
But the latest signs from chipmaker Intel Corp on
Wednesday that PC growth will not be as strong as it expected
this year cast doubt on how long Microsoft's strong performance
"The mature market consumer segment is still soft," Intel
Chief Executive Paul Otellini told analysts on a conference call
on Wednesday, after the company cut its 2011 PC growth
projection to a range of 8 percent to 10 percent from earlier
estimates in the low double digits.
Even that could be optimistic. PC sales grew only 2.3
percent last quarter, according to research firm Gartner, as
cash-strapped consumers held off buying or opted for an iPad
The number of PCs sold -- 90 percent of which come
pre-loaded with Windows -- directly affects Microsoft's top and
There are already signs that sales of its popular Windows 7
operating system are leveling off. Microsoft said last week it
has now sold more than 400 million Windows 7 licenses since
launch in October 2009, up from 350 million three months ago.
That suggests 50 million Windows sales in the quarter, about the
number it sold the quarter before that.
Windows 7 has already become old news for investors eyeing
'Windows 8' -- the provisional name for the next tablet-friendly
operating system expected late next year.
Wall Street analysts expect Microsoft to post a profit of 58
cents per share for the quarter, up from 51 cents a year ago,
while sales are expected to rise 7 pct to $17.23 billion,
according to Thomson Reuters I/B/E/S.
Microsoft's revenue and profit have recently slipped behind
archrival Apple, which had more than $28 billion of sales last
quarter, helped by its explosively popular iPhone and iPad.
(For an interactive graphic comparing major tech firms,
click on r.reuters.com/nuw62s)
Microsoft has seen its growth moderate since it rose to
dominance in the 1990s. Its sales grew 12-fold between 1991 and
2000, whereas they grew by only two and a half times between
2001 and 2010.
"There's just not enough growth there to make people
interested," said Michael Yoshikami, Chief Executive of fund
manager YCMNET Advisors, earlier this week. "It's the Johnson &
Johnson of technology. A large, cash flow-oriented
company, but explosive growth has probably passed it by the
Microsoft shares have outpaced the tech-heavy Nasdaq over
the past month, but still are perched around $27, a level they
have circled since 1998, adjusted for splits.
(Editing by Bernard Orr)