Microsoft on Thursday reported first-quarter earnings that narrowly beat estimates, while saying that it expects the holiday-season results to be slightly lower than analysts have projected.
The company lowered its estimates of both PC and server growth by a couple of percentage points, but said it continues to see relatively healthy enterprise demand.
"There are indications out there that business is fairly strong, but there is also concern about what could happen," chief accounting officer Frank Brod told ZDNet.co.uk sister site CNET News.com.
For the quarter that ended 30 September, the software maker said it earned $6bn (£3.8bn), or 48 cents per share, on revenue of $15.06bn. The company had been expected to post per-share earnings of 47 cents per share, on revenue of $14.78bn, according to Thomson Reuters.
"In spite of all that is going on, we had a fairly good quarter," Brod said.
Looking ahead, Microsoft projected December quarterly earnings of 51 cents to 53 cents per share, with revenue in the range of $17.3bn to $17.8bn. Microsoft had been expected to post per-share earnings of 55 cents, on revenue of $17.96bn, according to Thomson Reuters.
Brod also said the company had not seen a big drop-off in long-term contracts. "Our renewal rate on annuity contracts was at our historic levels, so we were pleased to see that as well," Brod said.
Microsoft shares inched higher in after-hours trading, changing hands at 22.68, up 36 cents, or more than one percent. That came on top of a one percent gain in regular trading.
The company is tempering its hiring plans, but Brod reiterated that there are no plans for a full freeze in new hiring.
"We may see some pauses in select groups," Brod said. "Overall, we will still have growth, although it probably won't be as robust as we talked about just a few months ago."
Brod said that, while the company is trying to keep expense growth in check, it also is trying to use the downturn as a chance to build new businesses. He noted that Microsoft invested heavily after the dot-com bust in its server and tools business, and that unit now generates billions in sales.
"Current business, certainly, is influenced by current economic conditions but our future growth is influenced on how we currently choose to invest," said Brod.
He said that the company's acquisition strategy has not changed substantially and reiterated that the company is not undertaking active talks with Yahoo.
The results for the individual business units were mixed. On the positive side, Microsoft's money-losing online unit turned in better-than-expected online advertising sales growth of 15 percent.
"We were pleased," Brod said.
Profits in the Windows unit were down year over year, despite slight growth in the unit's sales. The company's business division and server and tools unit posted a combined 19 percent sales growth, with double-digit profit growth as well.
The company is shaving its forecast for PC sales, and now expects the holiday quarter to be up eight percent to 12 percent, as compared to a prior forecast of 12 percent to 15 percent.
"We are still seeing the market growing," Brod said. "That's still close to double digit growth."
Microsoft's server forecast is also coming down a few percentage points, Brod said.
