The second first: I logged into my Fidelity account using Chrome a few minutes ago. For the first time in a long while, the screen wasn’t frozen. My guess is that its system is no longer being overloaded with individual investors making morning trades. If so, I’d take it as a sign that the emotions that have been driving the market for the past half year or so are cooling down.

When MSFT reported surprisingly strong fiscal 3Q22 earnings in April, it also raised its guidance for 4Q. This morning MSFT essentially walked back that increase in expectations, lowering 4Q eps guidance by a little more than 1% and citing strength in the dollar as the reason. The new range is eps of $2.24 – $2.32, vs. an actual of $2.17 in 4Q21. Both high and low end are shifted down by $.03.

I find this a little weird. The chart is interesting, in that it illustrates the company’s expenses are more heavily in dollars than its revenues. But I don’t think the guidance is really about forex, since the dollar isn’t that much stronger today than it was six weeks ago.

I see the issue as this: The average analyst earnings estimate for the June quarter is $2.33/share. The high is $2.39, the low is $2.29. If we take the simple-minded view (usually a good idea) that actual earnings will fall in the middle of the range, the company thinks it will report $2.28/share for the quarter. As things stand now, that’s below the lowest analyst estimate. To avoid the impression that business is worse than any expert observer could have imagined, something that’s bound to damage the stock, MSFT has to shift guidance down to the point where $2.28 can be seen as ok rather than a disaster. Hence, the press release and SEC filing.