Microsoft Corporation (NASDAQ:MSFT) CEO Satya Nadella has been moving fast to make key changes at the company, but BGC analysts say there’s still a long way to go before the transition will be complete. Nonetheless, they have increased their price target for the company from $35 to $39 a share, citing the steps Nadella has taken so far. They maintained their Hold rating on Microsoft.

Satya Nadella Microsoft

Structural problems for Microsoft

In a report dated April 17, 2014, analyst Colin Gillis says there are still a number of structural issues facing Microsoft Corporation (NASDAQ:MSFT). For example, the company recently announced a $0 licensing program for partners that are building tablets and smartphones with screen sizes of less than 9 inches. Gillis says this is smart, but only because Microsoft desperately needs market share so that developers will become more interested in making apps for the Windows 8 mobile ecosystem. He also believes the move will encourage more manufacturers to build more Windows-based devices.

Microsoft Corporation (NASDAQ:MSFT) also recently revealed Office for iPad. Most agree that it was delayed in an attempt to spark interest in the company’s own Surface tablets, but that failed, so Office for iPad was the next logical step.

And then there’s the pending deal with Nokia Corporation (ADR) (NYSE:NOK) (BIT:NOK1V) (HEL:NOK1V). Gillis expects this to be modestly negative to Microsoft Corporation (NASDAQ:MSFT)’s earnings after it closes. He also says it shows just how hesitant manufacturers have been in wanting to develop devices for Microsoft’s mobile platform.

Estimating Microsoft’s quarterly results

The analyst estimates that Microsoft Corporation (NASDAQ:MSFT) will report $20.7 billion in revenue for the March quarter next week. This would be a 1.1% year over year growth rate and a 15.5% sequential decline, but it is slightly ahead of consensus estimates at $20.3 billion.

He estimates earnings of 67 cents per share, compared to last year’s 72 cents per share and the previous quarter of 78 cents. His earnings estimate is also slightly ahead of consensus, which is at 63 cents per share.

Breaking down Microsoft’s estimates

In the Devices and Consumer segment, he estimates that Microsoft Corporation (NASDAQ:MSFT) will report $8.8 billion in revenue, which would be a 19.4% year over year growth and a 25.7% sequential decline. With this estimate, the division would make up 42.7% of Microsoft’s total revenue. He breaks this down further to 21.5% of the revenue coming from licensing, 12.9% from hardware and 8.7% from other.

Under Commercial, he estimates that Microsoft Corporation (NASDAQ:MSFT) will post $11.8 billion in revenue, which would be a 3.3% year over year increase and a 6.8% quarter over quarter decline. He believes the division will make up 57% of Microsoft’s total revenue, with 49% of the division’s revenue coming from licensing and the other 8% from other.

He believes Microsoft Corporation (NASDAQ:MSFT)’s Corporate and other revenue will be $62 million, which represents a 96.2% decline year over year and a 213% sequential decline. This would make the division represent .3% of the company’s total revenue.