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Microsoft earnings: What to watch

While the company is unlikely to divulge much on its plans to acquire Yahoo or AOL, that won't keep folks from hanging on every word. Also watch for how the Windows business is doing and where piracy rates are headed.

While much attention these days has centered around whether Microsoft will buy a big name to boost its online business, expect a lot of attention on Thursday to focus on the areas where Microsoft actually earns money.

The Windows business in particular will get attention after showing less than stellar results last quarter. Microsoft has forecast its Windows client unit will show between 7 percent and 11 percent growth for the quarter.

Overall, Microsoft said in April to expect earnings of 45 cents to 48 cents per share on revenue of $15.5 billion to $15.8 billion. (First Call has analysts pegging earnings at 47 cents per share, on revenue of $15.7 billion.)

As for the outlook for the current quarter, which stretches through September, analysts are currently expecting earnings of 49 cents per share, on revenue of $15 billion. It will be interesting to see where Microsoft's forecast comes in, as well as what it has to say about the broader economy and IT spending in particular.

Expect analysts to push for some more details on Microsoft's plans to significantly boost Windows marketing, particularly as Apple is gaining not only mindshare with its anti-Vista ads, but also market share.

Here's another thing I'm going to be watching--piracy rates. Last quarter, the company noted an uptick in piracy rates after making some significant gains. With Vista Service Pack 1, Microsoft also made life for pirates somewhat less onerous.

And of course, folks will be hanging on every word regarding Yahoo, AOL and anyone else Microsoft is thinking about buying. I would expect company officials to have only the expected things to say, that they are still interested in transactions that would accelerate their growth, strong go-it-alone strategy, etc. More interesting will be if they give any of the investment levels that go-it-alone strategy will entail.

We'll have the earnings report just as soon as its out, as well as some insight ahead of the earnings conference call and then frequent updates once the call gets underway.