Microsoft Corporation (NASDAQ:MSFT) will hold its analyst day tomorrow, which could be one of the last near term catalysts for the company’s stock. On Tuesday the company announced that it was increasing its dividend and beginning a new share buyback program, signaling that more change is likely ahead. Analysts at Nomura and JPMorgan have issued reports updating their models for the company in light of these most recent changes in capital strategy.

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Microsoft’s dividend larger than expected

Nomura analyst Rick Sherlund, who has been following Microsoft Corporation (NASDAQ:MSFT) for many years, notes in his report that the company’s dividend increase was more than expected. The company raised it by 22 percent from 23 cents a share to 28 cents a share. This pushes the dividend yield up from 2.8 percent to 3.4 percent. Wall Street had been expecting Microsoft to increase its quarterly dividend by only 15 percent.

In connection with the dividend increase, Microsoft also announced a $40 billion share repurchasing program, which replaces the $40 billion program that would have expired at the end of this month. Sherlund notes that the pace of share buybacks had slowed down at Microsoft, so this new program does not necessarily imply that it will become more aggressive with share buybacks.

Microsoft estimates could fall around analyst day

Sherlund believes that Wall Street estimates for Microsoft Corporation (NASDAQ:MSFT) could decline a bit around tomorrow’s meeting. He says this would reflect the gross margin pressure as the company shifts to being a devices and services business. Current Street estimates for Microsoft are $2.72 a share, compared to Sherlund’s estimate of $2.60 a share. He notes that this is without the inclusion of Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V)’s devices division, which Microsoft said earlier this year that it would purchase.

According to Sherlund, the most important key is going to be if there is “a more radical shift to subscriptions versus up-front revenue recognition.” He said this could take Microsoft’s earnings per share even lower, although it would build recurring revenues and stable cash flow over the long term.

JPMorgan changes estimates

Analyst John DiFucci and his team of analysts at JPMorgan have already adjusted their earnings per share estimates for Microsoft Corporation (NASDAQ:MSFT) ahead of tomorrow’s analyst day. They believe the company will guide Wall Street down on its fiscal year 2014 earnings per share estimates. Their revised estimates for Microsoft’s 2014 fiscal year are $2.59 a share, compared to Wall Street’s $2.76 a share.

JPMorgan analysts raised their earnings per share estimate for the September quarter by a penny, bringing it to 54 cents a share.