I can't say that we'll see a repeat of such bad news. Honestly, though, you have to worry if Q2 might have signaled the beginning of a bad streak. It's something you have to keep on the radar at the very least. Also, there's been talk lately that Mr. Softy might be getting soft.

Shareholders should look for any clues concerning the potential for some sort of deal with Yahoo! (NASDAQ: YHOO). Personally, I think Microsoft shouldn't fool around with Yahoo!, but as I observed in an article about the web portal's recent quarter, there's still some activity surrounding this dreaded concept. Microsoft should just concentrate on its own problems. I don't think it's in the company's best interests to hook up with an internet entity that has lost its way. I'm sure that Yahoo! shareholders, as well as traders, have a different opinion on that subject.

Right now, it's all about cutting costs. Microsoft wants to be as lean and mean as it can possibly be. We'll see how well the company is doing on that point. I hope to hear more information about the Xbox 360 and any thoughts about the future of Microsoft's video-gaming ambitions.

Well, I certainly wasn't predisposed to doing a trade before the earnings. I'm actually a bit biased on that point because I just recently got off a successful trade of the stock; I figure why get in before the news when I got out at a profit not long ago. I wrote some covered calls against the position and made a decent return, although my shares were called away this past weekend as the options attached to them were in the money (so, in certain respects, some might say I wasn't successful since the options I sold didn't expire worthless).

Microsoft will most likely talk of challenges and gloomy economic conditions. I think the best thing to do is wait before trading. If the stock sells off, you can assess the company's potential at that point. And if the stock rallies, you don't want to buy the euphoria. I would love to see great news from Microsoft since that might mean that the economy indeed is beginning to see the light at the end of the long recessionary tunnel. I just don't have a lot of faith on this count.