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What to expect from Microsoft’s results

Cloud moves, restructuring efforts to get attention from Wall Street

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Microsoft CEO Satya Nadella

Microsoft Corp. is scheduled to report its fiscal first-quarter results after the close of trading on Thursday. Here are some things to expect from the software giant’s report:

Earnings: Analysts surveyed by FactSet estimate that Microsoft MSFT, +1.03% will earn 50 cents a share for the quarter ended in September. During the same period a year ago, Microsoft earned 62 cents a share.

Revenue: Microsoft is forecast to report $22.01 billion in revenue, which would be a 19% increase over the sales of $18.53 billion it reported in the year-ago period.

Stock performance: Microsoft shares have risen 18% since the start of the year through Monday, while the S&P 500 index SPX, +0.91% is up 3%. Microsoft’s stock price has also climbed 21% since Satya Nadella was named chief executive on Feb. 4.

Other matters: Along with an emphasis on mobility, Nadella has made moving more of the company’s direction into the cloud one of his top priorities since taking over as Microsoft’s CEO eight months ago. Mark Moerdler, of Bernstein Research, said he believes Microsoft will give an update on its cloud-based transformation, as well as the company’s recent plans to cut 18,000 jobs.

Moerdler said he expects Nadella and Microsoft’s management team to continue to lead “an aggressive move to cloud and subscription [based services], with a significant increase in revenue and earnings per share” for the company. Moerdler holds an outperform rating and $56-a-share price target on Microsoft’s stock.

At BMO Capital Markets, analyst Joel Fishbein initiated his coverage of Microsoft in October with a market perform, or neutral rating, and stock-price target of $48 a share. Fishbein said the changes in direction and strategy that Nadella has implemented are “real and positive,” and investors have responded accordingly.

However, Fishbein said it’s important to keep in mind that Microsoft is in the early stages of a transformation and it comes with a significant amount of risk.

“The decision to go all in by risking the past -- Windows --in order to have a piece of the future [in] mobile and cloud is the right one, in our opinion,” Fishbein said. “But it’s still very unclear how Microsoft gets there.”