Microsoft chief executive Mr Steve Ballmer yesterday reaffirmed the firm's commitment to its Irish operations on a visit to Dublin.

He also signalled a shift in the company's strategy on the controversial issue of expensing staff stock options.

Mr Ballmer, who was in Dublin to talk to staff, clients, media and the Government, said the firm had located a new disaster recovery site at its corporate data centre in Dublin.

It will back up all Microsoft's business-critical information, currently stored in the US, in case of a major disaster such as a terrorist attack or an earthquake.

The site will not create a significant number of jobs but would add to Microsoft's existing Dublin operations, which currently employ about 1,800 people.

Mr Ballmer said the firm's decision to eliminate 15 jobs working on its .Net project in Dublin was "unfortunate" but he said Microsoft had to look at opportunities all around the world to see how it could to do things smarter.

"It was not a statement about Dublin, Ireland or the software development community here," he added.

Mr Ballmer, who also met with the Minister for State, Ms Mary Hanafin, said the Republic was competing with India and China for investment from Microsoft, rather than Eastern Europe.

However, he said the firm would not move the type of activities it had in the Republic to India because of the support functions here and the need for other language skills.

Microsoft employs hundreds of people in Dublin to work on software localisation, which often involves translating software into other European languages.

Mr Ballmer signalled a shift in Microsoft's position on expensing stock options.

He said, over time, staff options should be included on the income sheet of firms such as Microsoft. The company was working with other technology firms to figure out what this move would mean, he added.

This is a significant departure from comments by Mr Ballmer in July, when he was quoted as saying that Microsoft did not plan to expense stock options, although it was actively discussing the issue with other technology companies.

The thorny issue of expensing employee stock options hit the headlines following the exposure of corporate fraud at companies such as WorldCom and Enron.

Mr Warren Buffet, the billionaire investor, recently called for options to be treated as business expenses. But many technology companies, including Intel, have strongly resisted this due to the large number of options dispensed by firms in the technology sector. They believe it would damage the industry.

Analysts estimate a decision by Microsoft to treat employee stock options as a business expense would cost the software firm up to $2 billion a year.

Mr Ballmer received no stock or options last year but he holds 4.4 per cent of Microsoft's issued share capital, boosting his net worth to about $11.9 billion (€12.2 billion).

Forbes magazine has ranked Mr Ballmer as the 10th richest man in the US, although he remains well behind Microsoft founder Mr Bill Gates, whose wealth is estimated at about $44 billion.