Last week, technology giant Microsoft (NASDAQ MSFT) reported its fiscal first quarter results. The headline numbers looked really impressive, but they were again due to very conservative guidance from the company. Microsoft’s revenue growth appears very strong right now due to the Nokia acquisition, but the added costs are pressuring the bottom line.

Microsoft reported fiscal Q1 revenues (for the September ending quarter) of $23.20 billion, which handily beat analyst estimates for $22.02 billion. On a GAAP basis, quarterly revenue growth jumped by more than 25%. Obviously, this sharp jump was significantly helped by the Nokia devices and services acquisition.

Microsoft detailed more than $2.6 billion in phone hardware revenues for the quarter, compared to zero in the prior year period. On the bottom line, the company reported GAAP EPS of $0.54, which beat analyst estimates by a nickel. However, that figure was down from $0.62 in the prior year period. Microsoft reported $0.11 of items due to the company’s restructuring plan and the Nokia acquisition.

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While Microsoft handily beat analyst estimates, it was not too difficult to do so when the bar was lowered to the ground. Microsoft guided to fiscal Q1 revenues of $21.2 billion to $22.3 billion, while analysts at that time were looking for $23.09 billion (and $0.64 in EPS). Thus, we saw the analyst averages drop to $22.02 billion and $0.49, respectively, between quarterly reports. Microsoft’s fiscal Q1 results don’t look that impressive when seen in that light.

Microsoft continued this process at the latest report, again offering very conservative guidance. The company stated fiscal Q2 revenues would be between $25.4 billion and $26.5 billion, while analysts were at $27.87 billion. Since Microsoft reported, we’ve seen the average estimate come down by more than $1.4 billion, with the current forecast calling for $26.44 billion.

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Microsoft GAAP earnings dropped by 8 cents over the prior year period, despite the huge jump in revenues. This is due to the acquisition, restructuring, and other items. While no one expects Microsoft to constantly increase its margins, you do hope that over time the company can.

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