Microsoft Corp is set to report a dip in earnings on 27 January 2011, a year after the launch of its Windows 7 operating system went past estimates of the Wall Street. The fall in earnings is attributed to a reduction in the sales of personal computers behind expectations and Apple Inc's iPad eating away at the fringes of its core market.

Microsoft, largest software maker of the world that powers more than 90 percent of the world's computers, is still a profit-making entity but its fortunes have been tied with vulnerable PC sales. Moreover, investors are of the view that the software giant may not be able to replicate its dominance in the fast-growing mobile and tablet markets. This is evident from the fact that stock of Microsoft went down 2.4 percent in the last twelve months compared with a 24 percent rise in the tech-heavy NASDAQ.

Tim Bajarin, president of tech research firm Creative Strategies, said, "Microsoft is still a juggernaut in the PC business, Windows-based machines are still selling over 300 million a year," He added, "But they missed the smartphone revolution, and even though they were the first to really push the tablet, Apple basically redesigned it and left Microsoft in the dust."

Despite the sales of Windows 7 on a high, experts believe that they would not be matching the year-ago figure that was boosted by a one-time deferral of revenue from pre-sales of the operating system that was launched in October 2009.

Thomson Reuters I/B/E/S suggested that Microsoft is expected to report second-quarter profit of 68 cents per share, which is lower than the 74 cents it reported a year ago.