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Microsoft: We'll fare better in recession

Microsoft's CFO tells financial analysts the company is forecasting at least a mild recession, but it has a plan to weather the storm better than the overall IT industry.

While its crystal ball is no clearer than anyone else's, Microsoft Chief Financial Officer Chris Liddell told financial analysts the company is committed to faring better than the overall IT industry, whatever the economy brings.

The company, in its quarterly earnings report, lowered its growth outlook for the year, but not as much as some had feared. It is now forecasting at least a mild recession, as opposed the economic growth it once saw coming in the second half of its fiscal year.

At the same time, Liddell, in a call with analysts following the earnings report, pointed out that the company may yet see double-digit growth in revenue and per-share earnings for the year.

"We feel extremely good about our relative competitive position," Liddell said.

Microsoft also addressed last quarter's shortfall in the company's Windows Client unit, which posted revenue growth four percentage points lower than the forecast, even though PC unit sales were in line with what the company had projected.

Bill Koefoed, general manager of investor relations, told analysts the issue was that the mix of sales was far from what it had predicted, with traditional PC sales significantly slower, while low-end "netbooks" accounted for a larger share of the market.

Microsoft's FY09 forecast

On the Xbox front, Microsoft said it sold 2.2 million Xbox 360s as retailers boosted inventory ahead of the holiday season.

Update at 2:50 p.m. PDT

Liddell is talking about Microsoft's approach to the recession, which is to focus on the cost savings it can offer to customers, watch its own costs, and invest for the future.

The company expects to spend less than it had planned in several areas including hiring, marketing, and on the build-out of its data centers. Cuts are also planned in areas like travel and vendor expenses.