Microsoft Corporation (NASDAQ:MSFT) came out ahead of expectations in its latest earnings report, but that’s not enough for analysts at Indigo Research. They call the tech giant “a digital dinosaur: and say it’s “large, un-innovative and heading for extinction.” They really don’t like outgoing CEO Steve Ballmer and think all hope is lost for the company at this point. But they may be underestimating its potential.

Microsoft

Microsoft’s results weak or poor?

Indigo analysts appear to have one of the most pessimistic views of Microsoft Corporation (NASDAQ:MSFT) that I’ve read in a long time. Granted, analysts haven’t been especially optimistic on the company, but many have been changing their views in light of the restructuring and management changes which are underway at the company. Also the company’s better than expected results have sparked a few positive reports.

But even though several other analysts called the latest results from Microsoft strong, N. Landell-Mills of Indigo calls them weak, noting that the company’s underlying earnings per share dropped 3%. The analyst says Microsoft Corporation (NASDAQ:MSFT) will continue struggling as the PC market declines. He doesn’t believe the company will be able to diversify quickly enough and emphasizes disappointments in Windows and Office upgrades.

He says the bottom line is that Microsoft’s fundamentals are just weak.

What about Ballmer?

CEO Steve Ballmer said he would leave sometime over the next 12 months after a replacement in selected, and Landell-Mills apparently thinks badly of Ballmer, pointing to “a series of product failures and strategic blunders” since he took the helm in 2000. He notes that the alliances with Yahoo! Inc. (NASDAQ:YHOO) and Nokia Corporation (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V) haven’t really delivered the results they wanted and that Microsoft has struggled to sell its Surface tablets.

So what I would ask is if Apple Inc. (NASDAQ:AAPL) was able to reinvent itself with an innovative new product in 2007, what’s to stop Microsoft Corporation (NASDAQ:MSFT) from doing the same thing now? A lot’s riding on these next few years.