Goldman Sees Bumpy Q2 for Microsoft (MSFT) on Windows 8 Expectations
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Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
Rating Summary:
58 Buy, 11 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 15 | New: 40
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Microsoft (Nasdaq: MSFT) shares are seeing some upside despite some cautious comments from Goldman Sachs today into Microsoft's second-quarter 2013 results. The numbers are expected out on January 24th.
The firm is looking for revs of $21.3 billion and EPS of 71 cents, lighter than consensus views calling for revs of $21.7 billion and EPS of 75 cents. Goldman is also looking for 1.4 million Windows tablets to be sold, thought that doesn't factor in Surface hardware revs.
Goldman noted, "Even including estimated Windows Surface hardware revenue, we see the Street’s December quarter Windows forecast as aggressive. Assuming 500,000 Surface units were sold in the quarter, we estimate revenue would benefit by about $290mn. If the Surface has 11% gross margins, we estimate the EPS benefit would be negligible at roughly $0.002."
On PC shipments: "IDC estimates that PC shipments declined 6.4% yoy, versus our Windows forecast assuming a 3.0% yoy decline. While we are not adjusting our Windows estimates at this time given the different puts and takes (Surface hardware revenue, changes to PC units), we estimate that IDC’s forecast implies a roughly $200mn headwind to our December quarter forecast (and about a penny to EPS) excluding any contribution from Surface hardware."
Adjusted for upgrade deferral, Goldman sees Windows revs up 8 percent in the quarter versus PC shipment growth. That compares with 10 percent growth versus shipments for Windows 7 after adjusting for the technology guarantee.
For the third-quarter, Goldman sees revs of $19.8 billion and EPS of 77 cents, lighter than views once again. Te firm sees higher gross margin and revs being driven by Business and Windows units. About 1.4 million Windows tablets are being modeled for this quarter as well.
For fiscal 2013, Goldman thinks about 3.5 million Surface units would be needed to reach the Street consensus EPS of $2.87.
Goldman rates Microsoft at Neutral with a $31 price target.
Amid the outlook, Microsoft saw a little surge today and is up about 0.8 percent on the session.
The firm is looking for revs of $21.3 billion and EPS of 71 cents, lighter than consensus views calling for revs of $21.7 billion and EPS of 75 cents. Goldman is also looking for 1.4 million Windows tablets to be sold, thought that doesn't factor in Surface hardware revs.
Goldman noted, "Even including estimated Windows Surface hardware revenue, we see the Street’s December quarter Windows forecast as aggressive. Assuming 500,000 Surface units were sold in the quarter, we estimate revenue would benefit by about $290mn. If the Surface has 11% gross margins, we estimate the EPS benefit would be negligible at roughly $0.002."
On PC shipments: "IDC estimates that PC shipments declined 6.4% yoy, versus our Windows forecast assuming a 3.0% yoy decline. While we are not adjusting our Windows estimates at this time given the different puts and takes (Surface hardware revenue, changes to PC units), we estimate that IDC’s forecast implies a roughly $200mn headwind to our December quarter forecast (and about a penny to EPS) excluding any contribution from Surface hardware."
Adjusted for upgrade deferral, Goldman sees Windows revs up 8 percent in the quarter versus PC shipment growth. That compares with 10 percent growth versus shipments for Windows 7 after adjusting for the technology guarantee.
For the third-quarter, Goldman sees revs of $19.8 billion and EPS of 77 cents, lighter than views once again. Te firm sees higher gross margin and revs being driven by Business and Windows units. About 1.4 million Windows tablets are being modeled for this quarter as well.
For fiscal 2013, Goldman thinks about 3.5 million Surface units would be needed to reach the Street consensus EPS of $2.87.
Goldman rates Microsoft at Neutral with a $31 price target.
Amid the outlook, Microsoft saw a little surge today and is up about 0.8 percent on the session.
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