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Notes from MSFT's annual shareholders meeting

Here are more details from Microsoft's annual meeting of shareholders this morning. (Also see this earlier post on shareholder questions about Bill Gates' stock sales.)

Microsoft Chief Executive Steve Ballmer cited industry trends that he believes will be critical to the company's growth in the coming years: The rise of emerging markets, the shift toward software delivered as an online service, and the related shift toward advertising-funded software.

To illustrate the importance of emerging markets, Ballmer gave some financial details on a level that the company doesn't typically provide. Three years ago, he said, the company's combined revenue from Brazil, Russia, India and China was $900 million. By the end of the current fiscal year, he said, the company expects revenue from those countries to reach almost $3 billion. Russia alone has grown from less than $200 million to about $1 billion during the same period, he said.

Ballmer noted that the company, during the past fiscal year, returned $31 billion to shareholders in dividends and stock repurchases. "That's more than 170 percent of operating cash flow," he pointed out with a chuckle. "Not sustainable every year, but a great year for us." One shareholder apparently didn't hear that, asking the executives later, "I'd like to know if Microsoft is going to be more aggressive in purchasing their stock back."

It was Bill Gates' last shareholders meeting as a full-time Microsoft executive, although he has said he will remain Microsoft chairman after going part-time in his executive role later this year. After giving shareholders an overview of the company's technological direction, he noted that he would be "part-time chairman" at next year's meeting. That almost made it sound like Gates would be sharing the chairman's role with someone else, but afterward, a Microsoft spokesman said that wasn't the case, and that Gates was referring generally to his upcoming part-time executive status.

The Q&A portion included comments by Pastor Ken Hutcherson of Antioch Bible Church, who previously threatened a boycott of Microsoft in response to the company's support of workplace-related gay-rights legislation. He cited past discussions with Microsoft executives and alluded to the possibility of further action against the company, saying he is "probably one of the worst nightmares that this corporation can have."

Later, another person asked what shareholders could do to support the company in opposition to Hutcherson. Responded Brad Smith, Microsoft's general counsel: "As a company, we've had a clear policy with respect to the way we treat our people, and we believe in that policy. It's a policy that's founded on non-discrimination, it's a policy that we believe has served our employees well, it's served our shareholders well, and I think that was reflected last year when all of our shareholders were asked to vote on that policy, and over 97 percent of you and all of our other shareholders stood up and agreed with us. And I think that it is precisely in that form that shareholders have the opportunity to continue to make their views known, and we very much appreciate that support."

Google was also on the minds of shareholders. "What baffles me is how Google could reach $800 a share when you look at the potential risk they have in maintaining that value," said shareholder Richard Loarie of Redmond, contrasting that with Microsoft's "universal approach to software." He asked, "Why is this narrow, tall company worth $800 a share?"

Ballmer said he didn't want to comment on Google's share price. However, he added, "Google enjoys almost half today of all the advertising, online advertising that gets sold. People think that category, as I discussed in my remarks, is going to explode. Microsoft is investing heavily to provide new competition and share more in that profit stream. So hopefully we can create some of that value for the shareholders here in this room."

During the business portion of the meeting, all members of the board were re-elected, and both shareholder resolutions failed. See this earlier post for details on those.

Shareholders perusing the Microsoft product demonstrations after the meeting included Les and Lois Knudson of Shoreline, who said they have owned Microsoft stock since the late 1980s. Les Knudson expressed some regret about not selling a portion to buy Google stock after it went public. But Lois Knudson said they also felt some validation for holding onto their Microsoft shares after the price recent increase, even though it has declined somewhat since.

"Life has its ups and downs," she said. "And so does a stock."

Posted by at November 13, 2007 2:37 p.m.
Categories: Bill Gates, Google, Shareholder Issues, Steve Ballmer

Comments

#68096

Posted by unregistered user at 11/18/07 8:54 p.m.

Re: Hutcherson's comment - I appreciate that there is an effort to create a level playing field where people, not corporations, decide on which values should be supported in society. It makes sense to find out what legislation big companies are supporting. As Christians, we need to love the sinner as God does since each one of us are sinners. But when sin can be formally legalized among the masses, with potential of changing school and church teaching, adoption, etc., Christians need to have a voice.

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