Goldman Sachs Reiterates Neutral Rating, $31 PT on Microsoft Corporation

In a report published Friday, Goldman Sachs Group reiterated its Neutral rating and $31.00 price target on Microsoft Corporation (NASDAQ: MSFT).Goldman Sachs noted, “Microsoft reports F2Q13 results on Thursday, January 24 after the market close. We are modeling revenue and EPS of $21.3bn and $0.71, (Street: $21.7bn, $0.75). Our lower revenue forecast is driven by Windows (about $490mn lower) and assumes O/S revenue from 1.4mn Windows tablets (including Surface) and does not factor in Surface hardware revenue. With that said, we believe there is risk to our 1.4mn unit tablet forecast based on tepid demand for Surface thus far. For unearned revenue we are modeling $19.4bn (Street: $18.9bn). On a normalized basis, we are modeling deferreds to decrease 2.4% qoq (versus an average decline of 2.8% qoq over the past four F2Qs). Overall, we see Microsoft posting revenue and earnings below expectations (especially given IDC's estimated -6.4% yoy PC unit decline in the December quarter (GS: -3.0%), with unearned revenue likely to come in better. We would not be surprised to see F3Q13 estimates move lower post the call.”Microsoft Corporation closed on Thursday at $26.46.