Microsoft, the world's largest maker of computer software, has reported an 11% rise in first quarter profit driven by sales of home and business products.
Microsoft's stellar growth may be slowing
Profit was $2.9bn (£1.6bn) in the three months ending 30 September, from $2.6bn a year earlier. Sales rose to $9.2bn.
Revenue in the current quarter may miss market estimates, the firm warned, and analysts said growth from now on is set to be steady rather than spectacular.
Microsoft shares, under pressure this year, closed down 2.87% on Friday.
Microsoft said that its plan to offer bonuses based on stocks, rather than stock options, had hit profits in the fiscal first quarter.
Earnings also were dented by Microsoft's decision to cut its massive cash holdings and return money to investors.
Microsoft said that some customers are putting off buying products, preferring to wait for new versions of its Windows and server programs in 2006 and 2007 respectively.
Sales of its Windows program grew by 6.5% in the first quarter, while sales of its Office product rose by 14%.
The Windows server product is expected to be a major revenue driver in coming quarters, with the company calling demand "healthy".
Sales jumped 19% in the fiscal first quarter despite increased competition from rivals such as the free Linux software.
Microsoft said it expects total revenue of between $38.9bn and $39.2bn for the full 2005 fiscal year.
The predicted growth rate of between 5.6% and 6.4% is the slowest since the company first sold shares to investors in 1986.