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Will Microsoft's Q2 Earnings Prove Personal Computing Is Back?

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Microsoft (MSFT - Free Report) is set to report its fiscal second-quarter financial results, which include holiday season sales, on Wednesday afternoon. This means investors are likely pouring over estimates for the tech giant’s different divisions, including its recently-declining, yet highly-important, More Personal Computing unit.

Just a few days out from the release of Microsoft’s Q2 earnings, shares of the technology powerhouse hover right around their all-time high. This climb has been spurred, in part, by expansion in some of its newer business segments, including the Azure cloud computing platform.

And this quarter is expected to prove no different, as our latest consensus estimates call for Microsoft to post earnings of $0.86 per share and revenues of $28.35 billion. These gains would represent year-over-year growth of 3.61% and 8.77%, respectively.

However, investors should note that although Microsoft is expected to experience strong growth in its Productivity & Business Processes and Intelligent Cloud units, personal computing is expected to experience a minimal gain.

To prepare for this, we can turn to our exclusive non-financial metrics consensus estimate file. The Zacks Consensus NFM file contains detailed estimate data for business segment metrics and non-financial metrics reported by companies. The data is acquired from digest and contributing broker models and includes the independent research of expert stock market analysts.

With that said, let’s take a deeper dive into Microsoft’s More Personal Computing unit, which accounted for nearly 40% of the company’s total revenues last quarter, by using our exclusive non-financial metrics consensus estimate file.

In recent years, demand for personal computers—and related software—has fallen around the world. This has forced Microsoft to move to a “freemium” model with Windows 10, to focus instead on monetizing compatible apps and services. Microsoft saw its More Personal Computing sales grow a lackluster 0.9% to hit $9.4 billion last quarter.

In its upcoming second-quarter, Microsoft is expected to post More Personal Computing revenues of $12.012 billion, based on our exclusive NFM consensus estimate file. Investors should be excited to see that this projection represents modest 1.60% year-over-year growth for the struggling segment.

For estimates ahead of Microsoft’s report, check out our full guide: 3 Key Estimates for Microsoft's Q3 Earnings Report.

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