Microsoft outlook positive as Windows 7 passes 90 million milestone

Microsoft's chief financial officer Peter Klein says the company is looking to grow its enterprise spending over the next two years.

On the back of its success with Windows 7, which has now sold 90 million copies, the software giant expects to focus its efforts on businesses looking to invest in PCs and servers over the next couple of years.

It forecasts a modest increase in operating expenses for the next fiscal year from $27 billion to $27.5 billion, or around five per cent as it bides its time waiting for a rebound in technology spending. That is less than the $28 billion figure expected by analysts, however, and Microsoft shares were down nearly two per cent when the Nasdaq closed yesterday.

But after cutting more than $3 billion from its original spending plan last fiscal year, and shedding 5,000 jobs during the economic downturn, Klein says the company is well placed for the future. "We feel very well-positioned for growth as the economy recovers," he told a San Francisco conference.

Klein reiterated Microsoft's position that a recovery in business tech spending would occur in fiscal year 2011. "There will be an enterprise refresh cycle," he predicted. "It's not precisely certain when that will happen or how fast that will happen, but we expect it to happen this calendar year and go into next calendar year, and that will be a really good catalyst for growth for our PC business."

As has been the case since 2008, Microsoft feels the economy is too uncertain to issue revenue or profit forecasts for the year ahead.

Microsoft's bullish outlook is in large part thanks to Windows 7's reception. A total of 90 million copies have now been sold - 30 million of them this year alone, with Microsoft's fastest-selling product ever, contributing $6.9 billion in sales and $5.4 billion profit in the last quarter.

Klein also confirmed the Office 2010 Technology Guarantee Programme mistakenly leaked online last month. Under the scheme, vendors will offer anyone buying Office 2007 coupons offering a free or subsidised upgrade to Office 2010 when it is launched in June.

Klein says revenues will be deferred from Microsoft's third quarter earnings report, and will be recognised only after Office 2010 goes on sale.