$MSFT Preview

Eyes Wide Open

Nobody likes to stick their necks out in the stock market unless 1) you are on the sell-side and most stuff gets swept under the rug and forgotten easily or 2) you write it on twitter and delete it if you are wrong. Remember the Barclays analyst on NFLX 0.00%↑ put in print he thought subs would be 50% worse? They were 40% better! Did he lose his job? Nope.

The challenge this earnings season is stocks have risen a bit so far this year but expectations are definitely on the low side (for the most part). The bar almost seems like you need a major reset to estimates to re-rate a stock(s) lower and compress its P/E multiple. Agree so far?

MSFT 0.00%↑ reports on Tuesday night and we decided to go thru the Street models, Azure expectations (25% of sales), the rest of the biz (75% PC, Office etc), the last quarter conference call transcript and updated currency expectations (dollar weaker December and helps in March sequentially (but less year over year). Microsoft is going to set the tone for earnings season and the markets. Period. Debacle or relief? We are going to stick our neck out here and conclude the following: