Microsoft expects the current economic situation to continue through its fiscal year, ending in June:

"We are monitoring economic conditions and have three major areas of focus: continuing to provide high value products at the lowest total cost of ownership, increasing focus on our expense management, and prioritizing our investment dollars in key strategic opportunities to enable us to manage our business for the long term."

Microsoft also disclosed a huge IRS payout -- $3.1 billion -- during the quarter, to settle its 2000-2003 tax audit. That pushed cash flow down.

Another item: The interest rate Microsoft is paying on the $2 billion worth of bonds it issued: 1.42 percent.

Details:

"In September 2008, our Board of Directors authorized debt financings of up to $6.0 billion. Pursuant to the authorization, we established a commercial paper program providing for the issuance and sale of up to $2.0 billion in short-term commercial paper. As of September 30, 2008, substantially all of the commercial paper was issued and outstanding with a weighted average interest rate, including issuance cost, of 1.42%, and maturities of seven to 14 days."