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This Morningstar Analyst Is Watching Microsoft's Cloud Progress During Earnings

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Microsoft Corporation (NASDAQ: MSFT) investors will look for progress in its cloud business and how the refresh cycle in personal computers is playing out when the software giant posts quarterly results this Monday.

Speaking to Benzinga, Morningstar's Norman Young said that he'll look for increased movement of commercial customers to Microsoft's cloud-based Office 365 product.

The subscription-based software has "shown great growth in the past couple of quarters," Young said.

Second-quarter results may also provide a check-up on the health of Microsoft's data center products, where quarterly revenue growth has recently been in the double digits, Young added. "That's been a bright spot for Microsoft relative to other big companies" like Oracle, SAP and IBM.

Related Link: What To Expect From MSFT Earnings (In 7 Pictures)

Results may also offer insight into whether consumers and businesses are done replacing their older personal computers. "Are people going to say 'Windows 10 is coming out in six to nine months, so why don't we wait for that?'" Young asked.

Microsoft recently offered a preview of Windows 10, which will work on the desktop operating system, as well as on tablets and mobile phones.

Young will also look for progress on Microsoft's Nokia business in the form of progress toward its stated goal of break-even results by 2016. "Anything measurable toward that goal would be great," Young said.

On video gaming consoles, Young thinks price cuts for Microsoft's Xbox brand may have boosted holiday sales relative to Sony's competing PlayStation. Analysts, on average, expect that Microsoft will post earnings of $0.71 cents a share on revenue of $26.33 billion.

In the year-earlier period, income was $0.78 cents a share on revenue of $24.52 billion.

Brianna Valleskey and John Seward contributed to this report.

Latest Ratings for MSFT

Feb 2018Morgan StanleyMaintainsOverweightOverweight
Feb 2018NomuraMaintainsBuyBuy
Feb 2018Canaccord GenuityMaintainsBuyBuy

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