The Zacks Analyst Blog Highlights: Microsoft, Apple, Google, Nokia and Cisco

CHICAGO, July 22, 2011 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Microsoft (Nasdaq: MSFT), Apple (Nasdaq: AAPL), Google (Nasdaq: GOOG), Nokia (NYSE: NOK) and Cisco (Nasdaq: CSCO).

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Here are highlights from Thursday's Analyst Blog:

Mr. Softee Gets Tough on Growth

Tech behemoth Microsoft (Nasdaq: MSFT) genuinely surprised investors when it reported fiscal fourth quarter earnings after the bell today. Coming in well above expectations with revenue of $17.37 billion and diluted EPS of $0.69, the company noted in its press release that these were 8% and 35% above the prior year quarter.

Wall Street analysts had been looking for consensus EPS of 58 cents and the top estimate was only 63 cents. With the company finally gaining some traction in new business areas where investors thought they could not compete with Apple (Nasdaq: AAPL) and Google (Nasdaq: GOOG), Microsoft will now certainly be watched more closely for what it can accomplish in smartphones, tablets, search, gaming, and cloud computing.

Fueling operating income for the quarter of $6.17 billion and net income of $5.87 were strong growth and margin expansion in key business segments. From the company press release:

"Throughout fiscal 2011, we delivered to market a strong lineup of products and services which translated into double-digit revenue growth, and operating margin expansion," said Peter Klein, chief financial officer at Microsoft. "Our platform and cloud investments position us for long-term growth."

Office and Bing

Four of the five units were standout producers with Microsoft Business Division growing revenue for the fourth quarter at 7% and 16% for the full year and Server & Tools which hit 12% revenue growth, the fifth consecutive quarter of double-digit growth.

The company noted that "Office 2010 continues to be the fastest-selling version of Microsoft Office in history with over 100 million licenses sold. In June, Microsoft released Office 365 with familiar Microsoft Office collaboration and productivity tools delivered through the cloud."

Online Services Division revenue grew 17% and 15% for the full year, primarily driven by increases in search revenue. Bing's U.S. search share increased 340 basis points year-over-year to 14.4% this quarter.

Xbox Rocks, Windows Slows

The Entertainment & Devices Division grew revenue by 30% and 45% for the full year, due to the ongoing momentum of the console, Kinect, and Xbox Live.

Windows and Windows Live Division revenue declined 1% and 2% for the year with the company noting that their Windows 7 OS eclipsed the 400 million mark for licenses sold and that the new OS code-named Windows 8 is to feature a new user interface and application experience.

Next Stop: $30?

Microsoft reaffirmed growth going into next year of 3-5%. With interesting things happening on many business fronts, investors may be looking ahead to more earnings surprises in the future.

The company continues to seek a foothold in the hyper-competitive smartphone market by partnering with Nokia (NYSE: NOK) on its Windows Phone. They announced recently that they would make their tablet software compatible with popular semiconductors that run the devices. And its acquisition of Skype will enable it to deliver much of its software and services in new ways, from gaming to business enterprise communications, in competition with players like Cisco (Nasdaq: CSCO).

In after hours trade, MSFT was up about 60 cents (2.2%) to $27.70 on the report. For a stock that has spent most of the past ten years trading in a sleepy $10 range between $20 and $30 -- and an often single-digit P/E multiple -- is now the time to make another run above $30? I think investors will be less likely to bet against the company now, especially when it is using its cash war chest to develop so many exciting new business opportunities.

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