Microsoft Corporation (NASDAQ:MSFT) will hold its financial analysts’ meeting on September 19th, and is expected to maintain its planned business reorganization, according to a report from Goldman Sachs by analysts Heather Bellini, Sonya Banerjee and Brian Baytosh. The analysts also point out that the Board of Directors including Bill Gates is continuing to support this reorganization plan.


Microsoft expected to announce CAPEX guidelines, buyback and dividends

Microsoft Corporation (NASDAQ:MSFT) is expected to define guidelines for capital expenditure, and according to the analysts, capex for the financial year 2014 and financial year 2015 is estimated around $5.2 billion or 6 percent of revenue each year. During the event, management is also expected to announce a new share repurchase authorization, as well as an increase in its dividend.

The analysts feel that Microsoft will be keen to revive its declining market share all together, which suggests focusing on both its enterprise and consumer related business. If towards the end, Microsoft fails to implement a turnaround then it should streamline some of its business, according to the analysts.

Still room for improvement

Share performance of Microsoft Corporation (NASDAQ:MSFT) in the short term will primarily depend upon the change of CEO and whether an insider or an outsider is appointed the next CEO. The analysts feel that turning around Microsoft business is complicated as the primary factor that should be focused upon is hard to find. Further, just strong technology and engineering skills are not the only areas that the board should focus on.

Microsoft Corporation (NASDAQ:MSFT) has enough room for improvement to implement its turnaround with 99k employees and a revenue per employee metric of $0.79 million in its FY13 versus $0.95 million for Google Inc (NASDAQ:GOOG), and $2.15 million for Apple Inc. (NASDAQ:AAPL) in each company’s most recently reported fiscal year period.

Analysts’ estimates are less than the consensus

With Microsoft Corporation (NASDAQ:MSFT) reorganizing itself into a devices and services company and a change in revenue recognition that follows this restructuring, analysts at Goldman Sachs are considering that the operating margins and EPS might come in lower for fiscal 2014 and 2015. The analysts believe that the lower estimates are primarily driven by lower average selling prices (ASPs) for Windows and a change in the revenue structure as users continue to shift to its cloud based services.

At present, the consensus estimate for revenue and EPS for fiscal 2014 is at $82.15 billion/$2.75 and $90.69 billion/$3.00 for 2015. Goldman Sachs analysts expect revenue to decline by 2 percent below the consensus expectation at $80.62 billion and EPS is expected to be 6 percent lower at $2.59. Further, the analysts expect revenue for fiscal 2015 to be 6 percent below the expectations of the street at $2.82.