Microsoft investors reassured

Before Microsoft’s quarterly earnings report started, analysts and other people were treated to a great rendition of the theme song from The Lone Ranger. Memories of the heroic masked avenger might seem inappropriate to this economic crisis. But even if the software giant didn’t exactly become rescuers of investors, its results left many feel reassured.

As other technology companies have done, Microsoft has cut its predictions and is having difficulty doing so. But still the company’s first-quarter numbers show the floor is not falling out from under global IT spending. Microsoft not only beat analysts' revenue and profit expectations in the period that ended in September, but its forecast for this quarter is based on a belief that the recession will be mild.

Microsoft expects PC sales to grow a respectable 10% to 12% this yearend shopping season.

"It's important to keep things in perspective," Chief Financial Officer Chris Liddell told analysts. "We still see revenue growth."

Strong office sales for Microsoft

First-quarter sales grew 9%, to $15.06 billion, beating analysts' expectations for $14.8 billion. Profit rose 2%, to $4.37 billion. Liddell said conditions "clearly deteriorated" as the credit crisis deepened in September, but didn't say by how much. Still, sales of server software used by corporations grew 18%, and sales of the Office productivity program remained strong as well.

Microsoft showed surprising strength in its consumer-products division. While sales fell from last year, when the company benefited from blockbuster sales of the Halo 3 game for its Xbox console, sales exceeded Microsoft's expectations and profit rose to $178 million, from $167 million.

Even Microsoft's beleaguered Internet business had good news. While losses nearly doubled, to $480 million, sales grew a respectable 15% despite a difficult online ad market.