Microsoft Corporation (NASDAQ:MSFT) will announce second quarter earnings of the financial year 2014 on Thursday, January 23. With earnings just a few hours away, investors and analysts are interested in knowing the improvement in sluggish PC sales, and the company’s strategy to increase its revenue through the sale of smart connected devices like tablets and smartphones.


Surface 2, Xbox One numbers a must-watch item

Microsoft Corporation (NASDAQ:MSFT) is expected to earn higher revenue from cloud projects as it is focusing on the growth of products and services such as Hyper-V and Azure to compensate for the declining PC market. Also, the software giant is expected to make a significant announcement including the strategy to incorporate Nokia’s phone division into its existing portfolio of hardware devices, says a report from Forbes.

A report from Gartner notes the global PC shipment market narrowed by 7% in the fourth quarter of 2013. The company is continuously working towards enhancing its devices and services strategy to bring down the dependence on PCs. Microsoft is planning to gain traction in the hardware and cloud services segment. Microsoft unveiled Surface 2 tablets towards the end of the third quarter and the Xbox One gaming device in the fourth quarter. Analysts will be closely watching the unit sales and revenue numbers for these two gadgets, which Microsoft Corporation (NASDAQ:MSFT) is expected reveal along with the earnings. The numbers will reveal the success or penetration rate of both the devices along with the performance of the company in the tablets market.

Microsoft 365 expected to post higher revenue

The Office productivity suite is one of the most significant growth drivers for Microsoft Corporation (NASDAQ:MSFT), contributing around 40% of its stock value as per the estimates. In the first quarter of fiscal 2014 this division saw an increase of 5% in revenue to $6 billion with the launch of Office 365 that was adopted by over 2 million subscribers at a $1.5 billion annual revenue run rate. Microsoft offered Office 365 free of cost to students to make sure that the tool gains popularity. In the soon to be announced earnings, Microsoft is expected to post higher revenue run rate for Office 365 as its clients adopt the feature-rich, cloud-based Office software.

In the upcoming earnings announcement, these factors would contribute a lot for the company, and will assist it in reaffirming its market share, in the long term. Analyst estimates that the company has a market share of around 93% in productivity software market.