San Francisco - Microsoft on Thursday reported first-quarter results that exceeded analysts' expectations, with profits up 2 per cent to 4.37 billion dollars.

Sales rose 9.4 percent to 15.1 billion dollars in the quarter that ended September 30, the company said in a statement, spurred by the demand for Office programmes and the Xbox video game console.

The world's largest software maker said sales for the full fiscal year, ending June 30, 2009, would be between 64.9 billion dollars to 66.4 billion dollars.

"In a challenging economic environment, the first-quarter results exhibit the strength and diversity of our business model," said Chris Liddell, Microsoft's chief financial officer.

The company plans to save 500 million dollars by slowing down on hiring, travel and marketing, Bloomberg financial news reported. Microsoft can endure an economic slowdown longer than its competitors because it has many clients with long-term contracts.

Revenue in the Microsoft Business Division, mainly Office programmes, climbed 20 percent last quarter to 4.95 billion dollars. Xbox sales dipped 6 per cent, but this was less than the 26-per-cent decline the company had forecast.