After the closing bell Thursday, Microsoft Corporation (MSFT) posted impressive earnings results from its fiscal 1st quarter of 2011. The software giant brought in 62 cents per share in the quarter on revenues of $16.2 billion. The Zacks Consensus Estimates were 55 cents per share and $15.735 billion, respectively.

It’s actually an even better report than it looks at first glance — analysts covering MSFT stocks had been fairly busy over the past month downwardly revising estimates for the fiscal 1st quarter, the following quarter, fiscal year 2011 and fiscal 2012. Six out of 28 analysts had lowered expectations for the quarter over the past 30 days, and 7 of 32 revisions were lower for fiscal 2011.

Much of the negative speculation had been regarding leading tech research firm Gartner’s lowered expectation of PC shipments during the quarter — originally thought to reach 12.7%, Gartner cut its estimate more than 5% to 7.6%. Apparently, with Microsoft’s high exposure to the global PC market, analysts covering MSFT felt that this may reflect badly on Microsoft sales in the quarter. But healthy demand for Office 2010, Windows 7 and Xbox 360 games and consoles helped boost MSFT’s results.

Year over year, Microsoft’s numbers are most impressive: net income of $5.41 billion was a 51% improvement from the 1st quarter of fiscal 2010, revenues grew 26% and EPS climbed 55% year over year. However, the year-ago figures reflected a deferral of $1.47 billion ($0.12 EPS) relating to a Windows 7 Upgrade option. Considering this factor, net income rose 16%, revenues were +13% and EPS was 19% higher year over year.

In regular-day trading on Thursday, MSFT shares rose 23 cents, or 0.88%. Since the earnings release, shares in after-market trading have shot up 3.3% to $27.15. Still, MSFT stock is down more than 10% year-to-date and roughly 16% from its 52-week high back in April.

Prior to the earnings release, Microsoft had carried a Zacks #4 Rank (short-term Sell rating), which reflected the downward pressure from lowered estimate revisions over the past 4 weeks. But Microsoft’s quarterly outperformance may help reverse this estimate revision trend.

Before the opening bell Friday, we will publish a more-detailed account of Microsoft’s earnings beat.
 
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