Microsoft Chief Executive Steve Ballmer defended his decision to increase spending next year and signaled he is unlikely to increase the company's share-buyback plan.

Ballmer told investors Wednesday at a Sanford C. Bernstein conference in New York that the world's largest software company is making "big, bold bets" by spending on projects including Microsoft's MSN Internet unit.

Microsoft plans to hold onto its cash, which is now about $34.8 billion, Ballmer said.

"I think it is likely that we will continue to have to discuss with you for many years why we have as much cash as we do," Ballmer said. "At the same time, I think it's fair to say that we are also trying to return cash to shareholders."

Ballmer, under pressure from investors who have called for Microsoft to increase share buybacks to as much as $100 billion, said he will return cash to shareholders "in smart ways."

He said operating expenses will rise by $2.6 billion next year. Microsoft plans to increase spending for at least the next two years as it invests in its MSN, Office and Server and Tools units, he said.

Ballmer spoke in New York as part of a tour of the East Coast aimed at easing concerns about his spending plans.

On April 28, Microsoft stock plunged 11 percent after Microsoft indicated it would invest more in its businesses at the expense of higher short-term profits.

Ballmer's remarks in New York on Wednesday had no immediate positive impact. Microsoft stock fell 50 cents to close at $22.65.

The speech, at the Waldorf-Astoria hotel, disappointed some investors who had been seeking more details from Ballmer on his plans to revive the stock.

"His entire commentary was that of a football quarterback cheering the squad, but he didn't really offer any good numbers for people on Wall Street," said Joseph Rosenberg, chief investment strategist at New York-based Loews, who earlier this month said Microsoft should buy back $60 billion in stock. "He didn't address the real issues."

Microsoft returned $87 billion to shareholders through buybacks and dividends between 2001 and the end of last quarter, Ballmer said Wednesday. "We have returned cash to shareholders and will continue to work to do so," Ballmer said in response to a question.

Microsoft has $6 billion remaining on a $30 billion share-repurchase program announced in 2004. It probably will start a new buyback when the current one expires, Heather Bellini, a New York analyst at UBS, said after speaking with Ballmer on Wednesday.

"I don't think based on his comments earlier that you are going to see a big change in the company's capital structure," said Bellini, who has a "buy" rating on Microsoft. "Right now they are content in where their cash balance is."

Rosenberg said he still plans to own Microsoft shares and is willing to support Ballmer's decisions to invest. Still, Ballmer should take advantage of a low share price to buy back stock, Rosenberg said.

"You can't have it both ways," Rosenberg said. "You can't tell me on the one hand you have all these great investment ideas and on the other hand you don't care about your stock price and don't want to make a major repurchase."

Ballmer, who two weeks ago unveiled a package of employee perks and increased stock awards to combat ailing morale, said workers' attitudes haven't changed because of the company's falling stock price.

"People do look at the stock price some, but it's not a big issue," Ballmer said.

Rosenberg, who said a large share repurchase may boost morale, was skeptical. "Does Ballmer think that anybody in Seattle that works for Microsoft believes that?," Rosenberg asked.

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