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UPDATE 4-Microsoft profit beats Street, stock unmoved

* Q4 EPS and revs beat but market unimpressed

* CFO still “believes in” new PC buying cycle

* Investors worry about future growth (Adds analyst’s comments, links to graphics and table)

SEATTLE, July 22 (Reuters) - Microsoft Corp MSFT.O easily beat Wall Street forecasts with a 48 percent rise in quarterly profit, but its shares barely moved in the absence of powerful new signs of a rebound in global tech spending.

The world's largest software company said business customers are continuing to come back to the market for new personal computers, about 90 percent of which run on Microsoft's software, but it failed to match chipmaker Intel Corp's INTC.O strongly optimistic tone last week. [ID:nN12197658]

Microsoft's stock has rallied in recent weeks, outperforming the Nasdaq composite index. But as Apple Inc AAPL.O has overtaken Microsoft as the world's largest tech company by market value about a month ago, analysts question where growth will come from after Windows 7 and Office 2010 run their course.

Microsoft said it sold 175 million licenses for its new Windows 7 operating system since its launch last October, a performance rated solid but unsurprising by analysts.

“It’s a great quarter -- but does that matter?” said Colin Gillis, analyst at BGC Partners. “We all knew the business refresh cycle was in place. This is the dilemma for Microsoft -- how do they get the stock moving again?”

The company, which cut about 5 percent of its work force last year to keep a lid on costs, slightly lowered its operating expense target for the current fiscal year, which started on July 1.

It now expects to spend $26.9 billion to $27.3 billion this fiscal year, down from its March estimate of $27 billion to $27.5 billion.

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Graphic: link.reuters.com/kyr98m

StarMine comparative valuations:

link.reuters.com/dyt98m

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PROFIT JUMP

Analysts say it may be tough for Microsoft’s stock to advance in the short term. Investors are keen to see new phones running Windows Phone 7, Microsoft’s attempt to make up lost ground in the mobile sector which will be in stores in the next few months.

The company hopes to excite consumers with a range of Windows-powered tablet devices and its untested Kinect motion gaming platform. [ID:nLDE66C03S]

And its Bing Internet search engine is posting solid market share growth but remains miles behind Google Inc GOOG.O.

“It was strong in the areas that we thought they would be strong in, which is more of the business orientated operating systems,” said Kim Caughey, senior analyst at Fort Pitt Capital Group, which owns about 431,000 Microsoft shares.

But “my hot button as an owner of this stock is, what is their mobile direction?” she said. “Arch rivals Apple and Google seem to have an answer for that. I think the company really has to have an answer for this. I think they have to have a path.”

Microsoft on Thursday reported fiscal fourth-quarter profit of $4.52 billion, or 51 cents per share, up from $3.04 billion, or 34 cents per share, in the year-ago quarter.

That beat analysts’ average expectation of 46 cents per share, according to Thomson Reuters I/B/E/S.

Sales rose 22 percent to $16.04 billion, beating analysts’ $15.27 billion estimate, reflecting the continuing recovery in tech spending this year.

Global PC sales surged 22.4 percent last quarter, industry tracker IDC said this week, helped by strong demand from businesses, signaling a strong outlook for Microsoft.

“We still believe in the business PC refresh, which is the single biggest thing ongoing throughout this year,” Chief Financial Officer Peter Klein said in a telephone interview.

He said the new Office 2010 suite of applications, launched earlier this year, was off to a strong start but it was too early to judge the financial impact. He said the current “back to school” quarter should show how well sales are faring.

Microsoft shares were little changed at $25.71 after closing at $25.84 on Nasdaq.

The stock -- which is still hovering around the same level it was five years ago -- is down 15 percent this year, compared with a 1 percent fall in the Nasdaq composite index .IXIC. (Additional reporting by Jim Finkle; Editing by Edwin Chan and Richard Chang)

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