SAN FRANCISCO -- Microsoft ( MSFT) is hunkering down for an economic winter -- albeit a mild one.The company's lower financial outlook on Thursday is assuming a mild-to-deeper recessionary environment, CFO Chris Liddell said on the company's fiscal first-quarter earnings conference call. Although the quarter began normally, Microsoft began to see weakness in software sales by September, as customers faced market uncertainty and credit restrictions. The new wariness has continued through October, he added. For the second quarter, Microsoft projected revenue ranging from $17.3 billion to $17.8 billion and EPS of 51 cents to 53 cents. Analysts were expecting revenue of $18 billion and earnings of 55 cents a share. The company lowered its full-year expectations to a range of $64.9 billion to $66.4 billion in revenue and EPS of $2 to $2.10. The company had previously projected revenue ranging from $67.3 billion to $68.1 billion and EPS of $2.12 to $2.18. Analysts were expecting full-year revenue of $67.7 billion and EPS of $2.11. The company is tightening its belt in anticipation of an economic slowdown. "We're pulling back spending in lower-priority areas," Liddell said. Microsoft will cut second-quarter spending by $400 million to $500 million on marketing, travel, capital expenditures and vendor services. The company also will shoot for lower-than-expected headcounts, as it adjusts hiring plans. Technology Business Research analyst Allan Krans wrote in a note late Thursday that "Microsoft's spending control efforts will remain shallow, as the company's core business will likely remain strong in spite of the downturn."