Microsoft denies that it has instituted a hiring freeze, despite an internal memo described by an employee indicating the move.

"It is not true that we have instituted a hiring freeze," said Lou Gellos, a Microsoft spokesman. "What is true is that we are evaluating hiring as we always do and we might make projections that are different than perhaps we had at the beginning of the year."

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On Friday, some employees received a note saying that the company was re-evaluating open headcount and wouldn't be adding new headcount.

But Gellos said the company intends to continue hiring new workers. "This year we expect lots of growth and that we will hire lots of people," he said. "I think the nuance is in the fact that in light of the economy it's important that we do the prudent thing and evaluate projects that we're working on."

Gellos said he was not aware of a companywide memo to employees about hiring changes but said that individual divisions might have sent letters to workers.

A re-evaluation of hiring plans could be a sign that the financial crisis in the U.S. is taking a toll on the IT sector. Analysts this week downgraded the stock and earnings expectations for a variety of IT vendors including Apple, Salesforce.com, Intel and AT&T. Some analysts say that the financial crisis is causing a credit crunch that will likely slow IT spending by consumers and companies.

Microsoft has more than 91,000 employees worldwide, including more than 54,000 in the U.S. The software giant has seldom had layoffs or slowed down hiring in its more-than-30-year history.

The hiring news follows a trip to Europe this week by Microsoft's CEO Steve Ballmer during which he unveiled plans to hire additional engineers in Norway and other European locations to further the company's development of search technology.

The IDG News Service is a Network World affiliate.