US software giant Microsoft said it expects economic conditions to remain difficult through at least the second half of the year.
Chief Executive Steve Ballmer, speaking to analysts here, said the current situation could be described as "an economic reset".
"You don't beat it, you manage in this environment," he said.
"You think of it as a reset that might take several years to really reset, and then we need to really think about 'What do we invest in?'
"You have got to ask 'What is the business reset that goes with the economic reset?'" he said.
Chief Financial Officer Chris Liddell said Microsoft expects "conditions to remain difficult at least through the second half [of the year]." Ballmer said he did not expect further reductions after cutting 5,000 jobs last month, or 5.5 per cent of the workforce of the Redmond, Washington, software giant.
He acknowledged that Microsoft's web browser, Internet Explorer, has lost market share to other browsers such as Mozilla's Firefox and said the company would work to turn that around.
Ballmer reiterated that Microsoft remained interested in a partnership with Yahoo! on internet search to try to compete with web search king Google, which accounts for 63 per cent of the market.
He said Microsoft would continue to try to improve its share of the web search market although it was unreasonable to expect it to "go from four per cent to 25 per cent overnight".
Microsoft reaches deal on Illegal software
Microsoft, a member of the Business Software Alliance (BSA), has reached an out-of-court civil settlement with two computer resellers in Dubai, A4M General Trading and Al Istath Computers, caught selling unlicenced copies of Microsoft software.
Civil settlements have been reached between the two companies and Microsoft after they were found to be selling illegal software.
The civil settlements followed enforcement raids on the resellers in October 2008. Following the agreement, both A4M General Trading and Al Istath Computers have agreed not to sell any counterfeit or unlicenced Microsoft software in future and are looking to work in partnership with Microsoft to ensure that they only supply genuine software to customers.