Microsoft Q2 Earnings Jump, Aided by Windows 7

Cash flow, unfortunately, failed to excite. Cash derived from operating activities saw a decline in Q2, but still covered dividends and capital expenditures (it covered a nice chunk of share repurchases, too). Also, operational cash flow was higher on the six-month period. Really, when it comes to generating money, Microsoft is quite good, so there's nothing worrisome at all about the quarterly decrease.

While the Windows division did well, other parts of the company could do better. Most notably, revenues declined in the entertainment and devices division (although income for this segment increased). This is the part that contains the Xbox video-game franchise. Xbox 360 has been very competitive this console cycle, but I'm sure shareholders would love to see more contribution from this investment initiative.

There wasn't much action for Microsoft in yesterday's after-hours session, which could mean that shares will have a rough time pushing past the 52-week high of $31.50 in the near future. As some observers have mentioned, all the good news may already be accounted for at this point.

To me, Microsoft as a business looks healthy. As a stock, it might not be so robust. We'll have to see where the shares end up at the close of Friday's session, but I can tell you that, as far as I'm concerned, I would not enter a new position until a cheaper price presents itself.

Disclosure: I don't own any company mentioned; positions can change without notice.