PREVIEW-Microsoft looks to ease Yahoo, Windows concerns

By Daisuke Wakabayashi

SEATTLE, July 15 (Reuters) - Microsoft Corp (MSFT.O: Quote, Profile, Research) reports quarterly results this week, looking to ease the concerns of investors about slower growth at its Windows business and prove that its pursuit of Yahoo Inc (YHOO.O: Quote, Profile, Research) is not a distraction.

The world's largest software maker kicks off a crucial three-week period with earnings on Thursday, followed by an annual financial analysts meeting at its Redmond, Washington campus a week later.

Then, Yahoo holds its annual shareholders meeting on Aug. 1, which could determine whether Microsoft will be able to buy all or part of the Internet pioneer.

First and foremost, investors will look for signs in Microsoft's results that corporate customers and consumers are upgrading to its new Windows Vista operating system. A weak U.S. economy and a poor reception for Vista has raised fears adoption may be weak.

Analysts forecast Microsoft would report fiscal fourth- quarter earnings of 47 cents a share on a 17 percent rise in revenue to $15.6 billion, according to Reuters Estimates.

Last quarter, revenue at the Windows division, which accounts for more than half of the company's profit, were lower than expected due to an inventory build-up of computers and a lack of progress in the battle against piracy.

"What happened last quarter in the (Windows) client division was something that might persist," said Sid Parakh, an analyst at McAdams Wright Ragen. "That's what everybody is still concerned about."

Another concern is that large organizations will postpone upgrades to Vista, opting to wait for the next version of Windows code-named "Windows 7." Microsoft is targeting a 2010 debut for "Windows 7."