Microsoft (NASDAQ:MSFT) Quarter Driven by Increasing Enterprise Spend, Kinect

Microsoft (NASDAQ:MSFT) will get a nice boost from their wildly successful connect, but long-term the boost in enterprise spending will drive the company.

Barclays says, "Microsoft reports 2QFY11 results on Thursday after the market close. For the quarter, we forecast revenue of $19.35 billion (+1.7% y/y) and EPS of $0.70, slightly ahead of consensus estimates of $19.14 billion and $0.68. We expect very solid results driven by improving enterprise IT spending trends with the revenue upside driven by the success of Kinect/Xbox 360 during the holiday period.

"Looking out to the balance of FY11, we expect Microsoft to maintain a positive tone given improving enterprise trend, W7 enterprise cycle and Kinect momentum (8 million units sold in 2Q). For FY11, we maintain our revenue and EPS forecast at $69.3 billion and $2.52, respectively (consensus: $68.49 billion/$2.45).

"While we believe estimates can continue to move higher near-term, we continue to view Microsoft's inability to compete in tablets and smartphones as impediments to material multiple expansion."

Barclays reiterates an "Equalweight" rating on Microsoft (MSFT), which closed Tuesday at $28.45, up $0.07, or 0.25 percent. Barclays has a price target on Microsoft of $29.