Microsoft earnings preview: Can you say 'Kinect'?

A year ago, Microsoft reported record second-quarter earnings during the height of the recession, fueled by excellent Windows 7 sales. The new operating system had launched halfway through Microsoft's fiscal quarter.

This time around, as the recession eases and as tech stocks help lead the recovery, Microsoft has another big product launch to pump up its second-quarter earnings. In early November came the Kinect motion sensor for Xbox 360, which also has seen exceptional success.

The thing is, Microsoft's balance sheet can't depend on Kinect like it did Windows 7. The Windows division accounts for more than half of the company's profit. Xbox? Not so much. A year ago, the Entertainment and Devices Division was barely running in the black.

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