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Microsoft Corporation (MSFT) Investors Need a Boost. Will Earnings Do the Trick?

The last 12 months have not been kind to Microsoft Corporation (NASDAQ:MSFT). The highly touted Windows 8 launch fizzled, Redmond’s mobile push with premium partner Nokia Corporation (ADR) (NYSE:NOK) isn’t gaining traction, and Microsoft Corporation (NASDAQ:MSFT)’s trailing earnings continue to plunge. The stock is trailing behind its peers on the Dow Jones Industrial Average (INDEXDJX:.DJI). Will Thursday’s third-quarter report turn Microsoft investors’ frowns upside-down?

MSFT Total Return Price Chart

MSFT Total Return Price data by YCharts.

Unfortunately, most signs point to a solid “no.” Gartner and IDC have reported flagging PC sales in the first calendar quarter, going so far as to pin much of the damage on the Windows 8 failure. The Nokia Corporation (ADR) (NYSE:NOK)/Microsoft Corporation (NASDAQ:MSFT) duo is battling RES.IN MOT.DBA BLACKBERRY (FRA:RI1) for a modest third-place rank in the mobile market, claiming a vanishingly thin 3% market share today. Fellow Fool Daniel Sparks thinks the Windows Phone platform is “poised to potentially pull off a surprise,” but even Dan concedes that it’s not a good time to “bet big on Microsoft in the smartphone market.”

Analysts do expect Microsoft Corporation (NASDAQ:MSFT) to break that streak of plunging earnings: The consensus calls for a 13% increase to $0.68 in earnings per diluted share. That’s no guarantee of a strong performance, though. Microsoft has been hit-and-miss on the bottom line lately, missing one of the last four earnings targets.

Wall Street analysts are split over Redmond. Goldman Sachs and Nomura downgraded the stock last week to “sell” and “hold,” respectively. But Morgan Stanley just boosted Microsoft Corporation (NASDAQ:MSFT) to “overweight” with a $36 price target due to an “exhaustion of negativity.” Goldman’s downgrade came with a surprising $37 price target — but only if Microsoft split off its struggling online-services division. That’s not a likely move, hence the “sell” rating.

Kick CEO Steve Ballmer to the curb as well, and I might join Morgan Stanley on the sunny side of the Street. Until then, I’m afraid Microsoft Corporation (NASDAQ:MSFT)’s long legacy and massive assets are tied to a leader without a realistic vision. This quarter is no different, and I’d be downright shocked to see a strong Microsoft report here.

The article Microsoft Stock Needs a Boost. Will This Week’s Earnings Report Do the Trick? originally appeared on is written by Anders Bylund.

Fool contributor Anders Bylund holds no position in any company mentioned. Check out Anders’ bio and holdings or follow him on Twitter and Google+.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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