Microsoft investors eye rosy holiday quarter

By Daisuke Wakabayashi

SEATTLE (Reuters) - Investors will be looking for signs from Microsoft Corp. (MSFT.O: Quote, Profile, Research, Stock Buzz) of a strong holiday quarter for Xbox 360 video game consoles and new computers loaded with Windows Vista when the company reports results this week.

The world's largest software maker posts quarterly results on Thursday and investors expect the company to get a boost from the continued adoption of new versions of Windows and Office as well as a solid performance at its video game unit thanks to the release of the blockbuster game title, "Halo 3."

The shares are up 8 percent over the last month -- outperforming the Dow Jones Industrial Average, Nasdaq and S&P 500 indices -- and 25 of 34 analysts covering the company have a positive rating on the stock.

For its fiscal first quarter ended in September, analysts, on average, forecast Microsoft to earn 39 cents a share on revenue of $12.57 billion, according to Reuters Estimates.

"People are more optimistic on Microsoft's big business -- Windows -- because of recent PC numbers," said Morningstar analyst Toan Tran.

Market research firms Gartner and IDC said last week that worldwide personal computer shipments grew 14.4 percent and 15.5 percent, respectively, in the July-to-September quarter from a year earlier, signaling healthy PC demand.

Leading chip maker Intel Corp. (INTC.O: Quote, Profile, Research, Stock Buzz) also delivered a bullish outlook for PC sales in the current quarter.

That bodes well for Microsoft's mainstay Windows and Office businesses, which account for more than half of the company's revenue and nearly all of its profit. It released new versions of Windows and the Office productivity suite earlier this year.