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Microsoft will use recession to build company

Ballmer: We're looking to the long term

Microsoft believes the recession offers the chance to invest in the company,  preparation for the economy's eventual turnaround, according to CEO Steve Ballmer.

However, Ballmer reiterated that he does not expect the economy to improve very quickly, so Microsoft is prepared to hunker down and spend carefully until it does.

Ballmer said to figure out how, he's taking cues from how companies handled previous economic crises, most notably the Great Depression of the late 1920s and 1930s in the US: "I've had guys go through annual reports of a bunch of companies from 1927 to 1938 to see what were those guys saying," he said.

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Microsoft is following the example of one company in particular, RCA, which kept investing in research and development during the Depression and afterward dominated its industry, Ballmer said. Microsoft, too, will try to make gains in some areas where it can improve its market-share position while the economy is down.

"We'll compete for share - that's one thing that's economy independent," he said, adding that he is repeating a mantra of 'share' to his staff to remind them of its importance.

Another thing Ballmer took away from his historical research, however, is that the climate will continue to be difficult for the foreseeable future. "[Those companies] all have a story associated with them, and none of them is a quick recovery," he said.

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Keeping this in mind, Microsoft expects its revenue expectations to be conservative and its revenue growth to be lower than usual for the rest of the fiscal year and possibly beyond, Ballmer said. The company's fiscal years ends June 30.

Microsoft did not give financial guidance for the remainder of the year when it announced its second-quarter results and the redundancies of up to 5,000 people in January. Neither Ballmer or Microsoft CFO Chris Liddell commented on possible fiscal results but they did emphasise that Microsoft would continue to examine how the company could reduce costs even as it continued to invest.

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