NEW YORK (CNN/Money) - Microsoft has been in the news quite a bit lately.

Two weeks ago, there were rumors that the world's largest company by market value was considering a special one-time dividend payout to the tune of more than $10 billion, or an increase of its common dividend, which it began paying in March. The company did not comment on that speculation.

Then Microsoft shook up the tech world last week when it said it no longer would give out options to employees and instead would award them restricted stock, setting off intense debate about the future of options in Silicon Valley.

And oh yeah, if that all wasn't enough, the company is set to report its fiscal fourth-quarter and full-year earnings Thursday.

For the quarter, analysts expect Microsoft to report earnings of 24 cents a share, up from 21 cents a year ago, according to First Call. Wall Street is predicting sales of $7.9 billion, compared with $7.3 billion in last year's fourth quarter.

But of course, the guidance that Microsoft gives for its fiscal first quarter will be what investors will really be waiting to see. In that regard, it's unlikely that the outlook will be much higher than what analysts currently are forecasting: sales of $7.9 billion and earnings per share of 25 cents.

Richard Williams, strategist for Summit Analytic Partners, a research firm specializing in software, said that so far there has been little evidence of a major improvement in demand for software.

Network Associates, a leading provider of network security software, recently warned that sales and earnings for the current quarter would be lower than expected. And Mercury Interactive, which develops software that tests the performance of Internet applications, gave guidance for third quarter sales that was slightly below Wall Street's consensus estimate.

In addition, Microsoft is not known for making overly optimistic forecasts. Throughout its history, the company has kept its guidance low in order to minimize the risk of missing targets.

And so far as this earnings season is concerned, even companies that have reported strong results have been reluctant to predict a broader upturn in the economy.

Nowhere was that more evident than in Intel's conference call Tuesday. Despite reporting a strong quarter and raising its sales guidance, the world's largest semiconductor company went out of its way to say that its success was due more to market share gains and new products as opposed to a pickup in demand. (see more)

"Nobody has been willing to stick their neck out about when we'll see a tech recovery and there's no reason to think that Microsoft, with its conservative bias, would be any different," said Marc Klee, co-manager of the John Hancock Technology fund, which owns shares of Microsoft.

Simply put, investors probably will need to see more evidence of improving demand for personal computers before embracing Microsoft's (MSFT: Research, Estimates) stock again. Shares have gained 5.8 percent this year, lagging the broader tech rally.

Despite newer growth initiatives, such as its Xbox video game console and MSN Internet service, Microsoft remains highly dependent on its Windows operating system and Office software for most of its profits.

"The reason we own Microsoft is because once the economy improves we expect an upgrade in the PC cycle. All this other stuff is noise," said John Thompson, manager of the Thompson Plumb Growth fund.

Noise or not, Microsoft's comments about broader tech demand may be overshadowed by the continued speculation about a dividend increase and what impact the elimination of options will have on Microsoft's earnings.

Klee said he would not be surprised if Microsoft announced a dividend increase, especially since wireless equipment firm Qualcomm (QCOM: Research, Estimates), which also initiated a dividend this year, announced Wednesday that it was boosting its payout by 40 percent. He does not believe Microsoft will pay a special dividend, however.

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As for options, Brad Reback, an analyst with CIBC World Markets, said that Wall Street is looking for more clarity about how its change in compensation practice will affect earnings.

Options were not required to be treated as an expense on Microsoft's income statement but restricted stock grants will be, which would clip earnings.

Still, Reback said that at the end of the day, Wall Street probably will continue to look at Microsoft's earnings on an adjusted basis, that is backing out the expenses from restricted stock, when coming up with earnings forecasts.

Analysts quoted in this story do not own Microsoft and their firms have no investment banking relationship with the company.