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SEATTLE (AP) -- Consumers may be shopping for computers again, but Microsoft Corp. still needs businesses to start accomplishing the same.

Microsoft said Friday its acquirement kept falling and its net income alone 18 percent in the last quarter, partly because of the hesitation of businesses, which are added assisting for Microsoft than consumers are.

Big cost cuts at Microsoft made a difference, though, helping the aggregation bear balance well above analysts' expectations. Its stock surged $1.29, nearly 5 percent, to $27.88 in afternoon trading. Earlier in the day, the stock reached a 52-week high of $29.35.

But while the quarterly after-effects looked acceptable to Wall Street, they also showed how abundant Microsoft is still wrestling with a PC industry that remains abundant weaker than a year ago. In the accomplished year the software maker resorted to its aboriginal wide-scale layoffs, and in July it said its annual acquirement had collapsed for the aboriginal time back the aggregation went accessible in 1986.

After skidding for six months, computer shipments rose in the July-September period. But shoppers tended to buy inexpensive laptops and alike smaller, cheaper netbooks, which accept older and less assisting versions of Windows installed. Many consumers also passed on affairs Microsoft's Office, the package that includes Word, Excel and Outlook, which contributed to a 14 percent total decline in acquirement in the quarter.

Businesses watched their spending alike added closely. That abject bottomward Windows after-effects because business-level versions of the operating arrangement are added expensive. And companies that accept cut workers are ordering beneath copies of Office and added Microsoft software frequently acclimated at work. Revenue and profit in the group that! makes O ffice sank alike as businesses spent added on newer software such as Sharepoint.

Chris Liddell, Microsoft's chief financial officer, said in a appointment call that businesses could start replacing aging PCs and servers starting in 2010, "although it could be gradual and occur over a brace of years."

Other companies, especially Intel Corp., accept adumbrated they expect things to advance faster, in the accepted quarter.

Microsoft's balance in the last division alone to $3.6 billion, or 40 cents per share, though that was abundant college than the analysts' appraisal of 32 cents per allotment in a Thomson Reuters survey. In the same aeon last year Microsoft earned $4.4 billion, or 48 cents per share.

Microsoft's bottom line was aching by a summer program in which the aggregation let bodies buy a PC with the Windows Vista operating arrangement and afterwards install Windows 7 on the machine for free. That meant Microsoft counted alone bisected of its Windows sales in the aeon and will report the rest as customers upgrade to Windows 7, which was appear this week, through January, when the action expires.

If it had counted its deferred Windows revenue, Microsoft's balance would accept added 8 percent from last year.

Revenue sank to $12.9 billion, though if Microsoft had counted all the Windows sales, it would accept acquaint a smaller 4 percent bead in revenue, to $14.4 billion.

A big acumen that Microsoft's balance would accept increased, if not for the Windows deferrals, despite lower acquirement is that layoffs and added amount cuts are advantageous off. Microsoft employs 4 percent beneath bodies than a year ago and has spent less on marketing and outside contractors, pushing operating costs bottomward added than $600 million compared with a year ago.

Microsoft said costs in the accepted fiscal year, ! which en ds in June, could be as abundant as $400 million lower than ahead expected.

The aggregation also lifted its balance per allotment by resuming purchases of its own stock afterwards a six-month pause, spending $1.45 billion in the quarter.

Even with the buybacks, Microsoft managed to sock away plenty of cash. The aggregation said its cash and short-term investments that could be quickly converted to cash totaled $36.7 billion at the end of the quarter, up from $31.4 billion at the start.