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Microsoft announced record earnings today, courtesy of Windows Vista. For Microsoft, that’s really saying something, as they’ve had a history of great earnings. Their EPS for the quarter was 50 cents / share compared to last years 29 cents for the same quarter. That’s quarterly revenue of 14.4 billion! Pretty hefty, huh? The earnings beat analysts’ expectations by almost 15%. 

The question is; will this robust earnings trend continue, and will it be enough to propel MSFT to some impressive gains. After a healthy run from 1986 to 2000, Microsoft has experienced pretty flaccid stock performance, much to the dismay of many who had expected the stock’s performance to remain upward bound.

As I noted in a post a few days ago, increased earnings are one of the prime harbingers of climbing stock prices. These latest earnings figures certainly qualify. The EPS quarter / quarter was up by about 65%, right in the range where it helps convince investors to be in a buying mood. The last time Microsoft released a major OS product revision, over a decade ago with Windows 95, the stock just dribbled upward for about 6 months, then more than doubled in the following 12 months. Will we see something similar this time? Time will tell, but MSFT stock has been far from impressive so far this year, actually losing ground since Jan. 1^st, although it has posted fairly strong gains since mid-March, with gains of about 15%. Unfortunately for Microsoft shareholders however, that 15% only served to get back some of the losses experienced in Q1.

Another trend noted to help increase stock prices is the introduction of a new product or service. Well, Microsoft certainly did that. In addition to Vista, they also released their version of a portable media player, the Zune, and a download service to go along with it. Only time will tell if the Zune becomes a thorn in the iPOD’s side, but whatever the fate of the Zune, you can be sure that Vista will thrive for at least a few years to come. It might be a great time to look at some hardware manufacturers stocks as well, due to the memory, speed and 3D requirements needed to make the most of Vista.

One other non-MSFT related note. If you have shares of cell phone service provider iPCS, today’s a happy day indeed as they announced a special cash dividend of, now sit down, $11 per share! It’s enough to make you get out the old cell phone and start calling some friends. Sadly, I hold no shares in either company.