Microsoft's Ballmer: And I'm telling you, I'm not going

Microsoft's Ballmer: And I'm telling you, I'm not going

Summary: Apologies to Jennifer Hudson (and Jennifer Holiday), but Microsoft CEO Ballmer is telling folks he's not going anywhere -- at least not for the time being.

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Apologies to Jennifer Hudson (and Jennifer Holiday), but Microsoft CEO Ballmer is telling folks he's not going anywhere -- at least not for the time being.

Many Microsoft critics, including many Wall Streeters , have been wondering aloud whether Ballmer is the right man to lead Microsoft these days. At a Seattle Rotary Club meeting on June 29, when asked the question yet again, Ballmer had an official response.

“YOU TELL ME if I lack energy or conviction, or we’re not driving all the change we need to drive," Ballmer told the audience, according to GeekWire.

(Listen to the Ballmer sound clip via GeekWire here.)

Ballmer said in 2008 that he planned to stay on at Microsoft for nine or ten more years.

As the Seattle Times noted, Ballmer repeated again the key areas where Microsoft is focusing right now. He said it's all about touch, natural language understanding and the cloud. (And Windows, of course. Can't forget that Microsoft is still about "Windows, WIndows, WIndows" to quote Ballmer.)

Ballmer also seemed to have provided an earnings preview to the Rotary Club audience during his remarks today. According to the Times, he told audience members:

"The products we have are difference makers," Ballmer said. "They're the reason we will make more than $70 billion this year and, give or take, $26 billlion to $27 billion in profits."

Update: Microsoft officials have provided an exact transcript of Ballmer's remarks. Here's the slightly amended statement:

"We're building the products that we hope are the difference makers. We've been very fortunate. We've made bets. We've built products. We've made the difference. There's a reason why we'll do almost $70 billion in revenue this year, and we'll make over 20-whatever, $26-27 billion in profits. There are reasons -- we made the right bets and we're making the bets for the future."

(For its previous fiscal year, Microsoft made $62.5 billion, with $18.8 billion in net income. And Microsoft's operating income was $24.1 billion for that year.)

Microsoft's fiscal 2011 ends on June 30, tomorrow. The company isn't slated to provide its earnings report until July 21.

Microsoft's stock price has been higher than usual this week, though it isn't exactly clear why. I guess we can rule out an immediate Ballmer succession plan as one of the potential reasons, however.

Topics: Microsoft, Banking, CXO, IT Employment

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

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  • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

    Clearly, $26 billion in proffits means doomsday for microsoft. He should be fired for making that kind of money!
    pedroroque
    • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

      @pedroroque :)
      1773
    • And the rest of the industry performance?

      A lack of energy or conviction has never been Ballmer's weaknesses, but to argue MS is at the top of their game at the moment is pretty hard.

      MS continues to make large profits from the same products : Windows Desktop and Office. Windows Server has a few wins but largely thanks to Windows Desktop (e.g. AD and integration : file sharing).

      However the growth isn't in these sectors anymore. Desktops are saturated, servers very competitive (particularly once Windows removed). Despite tens of billions poured into R&D MS is still Windows & Office.

      By creating entirely new markets others are showing the way. MS needs to get a return on their R&D investments. A game controller as THE major product launch for 2010 simply doesn't cut it.

      Challenges are already in the market to rock MS's desktop monopoly (mobile) and MS hasn't communicated it's strategy at all (.Net/Silverlight or HTML5).

      Pointing to 5% revenue growth (and stagnant share price or almost a decade) when competitors are announcing 25+% (shares going through the roof) isn't something I'd be praising him for.
      Richard Flude
      • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

        @Richard Flude <br><br>Agreed. Well said. Momentum can take someone far, but now that the engines are running out of gas we'll see where the car goes. I have hopes for Microsoft, but having to pay off another sagging company to use your (for sale/for profit) product is not a good sign. What will their world be like when Win client and Office revenues evaporate? Win 8 had better be something absolutely appealing to the masses.
        ShamooToo
      • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

        @Richard Flude,

        5% revenue growth is what it is. You can't put lipstick on a pig. I'll agree with you on that.

        Mobile is not poised to rock MS's desktop monopoly. They are two different products with some overlap. If anything in the market is threatening MS's desktop monopoly it's cloud computing. Microsoft will be a player in the cloud computing future with Azure. They won't be as dominant as they are on the desktop, but they will sure be relevant.

        As far as .NET/Silverlight or HTML5, from a developer platform perspective, who else has communicated their direction with HTML5? I haven't seen alot of tools from Oracle on the subject either.
        bmonsterman
      • Richard, you are wrong...

        @Richard Flude I bet a large majority of analysts will agree with you, but I don't. First the stock price is not an argument, it is largely based on wall street's false prospective of the MSFT's future, and they are wrong, no matter how MSFT performs, its stock won't go anywhere until Win8, when the last cloud over MSFT's sky clear up. You know what that is: the mobile. MSFT still make most of money from Windows and Office, isn't that true for Google, IBM, Oracle..., ...? You mention growth is moving to other areas like: Cloud, Mobile. True, and I believe MSFT will make a lot of money in that area in comming a few years. Contradict to popular belief, the cash cows in Windows and Office, Servers are still very healthy as far as we can see. And from what I can tell, MSFT cloud will be dominant force in the market. I also expect Win8 will clear you concern about mobile. <br><br>Again, you mentioned microsoft stock price stand still for a decade. True. But you need to take a closer look. It is a case for most big tech firms, until the start recovery year ago. 1 year ago, msft stands $31, and going up with other firms and the DOW, NASDAQ. If the stock goes with business performance, it should in mid $40s now. What happened during the year? Tablets and phones. People are saying msft has lost in smartphone, and no strategy in tablet. That's false. I don't argue with you on this, you say what you see. But there are things don't see.
        jk_10
      • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

        @Richard Flude very well said, crisp and clear. However, just to look from a positive side, they are leading on some fronts like Office, Xbox, Visual Studio and I would also like to add SQL Server since it is one of the hidden/not very well known cash cow of MSFT. Also, the quality of products have improved than what it used to be (generally buggy), which is another positive thing. I am not saying that this is because of Ballmer, but I sometimes do think that managing so many departments single handedly could be a tough job. MSFT is huge compared to Apple/Google and managing could be a challenge than what we think/imagine.
        animageofmine1
      • Hit the nail on the head...

        @Richard Flude There's no shame in having the business model of a water utility - stable product that never changes, guaranteed dividends - if you are not able to drive change and create new markets.

        I think the evidence is now in that Steven A. Ballmer cannot create new markets and drive change.

        How much better off would shareholders have been if instead of making himself the center of attention by splurging on Bings and bangs and Zunes and Kins and the litany of other failed crap, he had instead just made the dividend a hell of a lot higher, fired about half the company, and focused like a laser only on Windows and Office?

        By the way, he can run his fat mouth all day about whether he's staying or going - it's not his decision to make. It's the shareholders.

        Perhaps BillG is loyal to his friend and doesn't really care about the financial well being of a lot of shareholders he's never met and never will meet. If that's true, Ballmer could be there forever and ever. Or rather, until Microsoft's 'General Motors moment'.
        HollywoodDog
      • Message has been deleted.

        i8thecat3
      • jk_10, he only sees what he wants

        @jk_10
        It not worth arguing with Richard Flude, he is a die-hard Apple fanboy (possibly on their payroll?) so you can't point out things he missed, but understand he left them out for a reason -

        They don't bolster his statements, they actually detract from it.
        Will Pharaoh
      • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

        @Angrypug - I'd argue that the engines ran low on gas circa 2005 when Longhorn was cancelled, Vista started as an emergency recovery project, Gates decided to begin transitioning out of the company and the old internal fiefdoms started to crumble.

        It's taken a few years, but the company has done a pretty good job over the last couple of years to start rebuilding itself internally now that most of the old guard has gone. Just look at their recent performance: Win7 is a stellar success, Kinect took everyone by surprise, XBox is out-selling all other consoles, Office 2010 is doing gangbusters and WinPhone has a really good solid step back into the mobile market, etc.

        The company is poised to really start driving forward. Many have forgotten just how driven Microsoft can be when it's under pressure. The slumbering giant is awakening and everyone better be ready for a fight!
        bitcrazed
      • Microsoft's share price has broadly tracked the Nasdaq

        @ Richard Flude<br><br>It's intellectually dishonest to compare the growth rates (profit/revenue/share price) of a large, successful firm with the growth rates of relatively new, small or previously failing firms (an example of the latter being Apple). Microsoft remain one of the most profitable firms in the world, and their share price during Ballmer's tenure has broadly followed the Nasdaq (even with the regulatory burden imposed by competition authorities, which other IT firms haven't had to deal with).<br><br>Anyone who expected Microsoft's growth rates in the 00s to duplicate the growth rates of the 90s was clueless. If they had done, Microsoft's market capitalisation would be far above the annual GDP of any country in the world, and well on the way to exceeding the annual GDP of the world. It's astonishing that so many people make these nonsensical growth rate comparisons without even thinking about the context.
        WilErz
      • Another point

        Microsoft's return on equity is 44.0, compared with 27.4 for the software industry as a whole. Apple's return on equity is 38.8, compared with 39.4 for the PC industry as a whole.

        The higher the ROE, the more effective a firm's management are at generating profit from equity (i.e. the money invested by shareholders). It's only really meaningful within industries and not across them, and Microsoft do far better than the average for their industry, whilst Apple are only about average for theirs.
        WilErz
      • It it fair to expect new markets from Microsoft?

        @Richard Flude "It's intellectually dishonest to compare the growth rates (profit/revenue/share price) of a large, successful firm with the growth rates of relatively new, small or previously failing firms (an example of the latter being Apple)."

        Apple not only has much higher growth than Microsoft, it made whole new markets - MP3 player ecosystem, smartphone ecosystem (which everyone else is copying), and finally the tablet ecosystem that is the envy of the world.

        Microsoft had more money than God and twice as much engineering talent. Why did they fail at each of these markets?

        Mary Jo Foley once stated that Microsoft was 'not about to sit idly by while Apple runs away with this [tablet] market'.

        They appear to have flailed and failed and made a lot of guttural noises as Apple ran away with that market.

        Is market capitalization a fair comparison? Is innovative product a fair comparison? Is successful execution of each product they attempt a fair comparison? Is churn rate of high skill employees a fair comparison?

        Is overall return of value for shareholders the ultimate fair comparison?

        Is whether your statements later turn out to be embarrassing or not a fair comparison?
        HollywoodDog
      • Straw men

        @ HollywoodDog

        You're just setting up straw men so you can knock them down. I didn't claim Microsoft were more successful in the 00s as Apple, or are more successful today. I pointed out that a comparison of growth rates between firms starting at the top (large and highly profitable) and firms starting at the bottom (loss making and close to insolvency) is intellectually dishonest. It is -- extremely so.

        Apple's management have done a spectacular job of turning round Apple, building on the overwhelming success of the iPod, and Microsoft clearly failed with the late and underwhelming Zune. At the same time, it isn't obvious to me that a software firm like Microsoft should have been expected to become the leader in a consumer electronics market like music players. Sony arguably missed the boat, but consumer electronics has never been a core business for Microsoft. Moreover, Apple created the iPod to help sell Macs. They had no expectation that it would actually supplant the Mac as their core business, so there was certainly an element of luck involved.

        Apple are well ahead of Microsoft in mobile phones and tablets too, and those are markets where Microsoft should have some competence. At the same time, pre-iPhone market leaders like Nokia and Rim have been hit by the iPhone onslaught too (and the Android imitation), so Microsoft weren't the only ones taken by surprise. As things stand, Apple have clearly got much more momentum in these relatively high-growth markets than Microsoft, but Microsoft can't win everything. (Besides which, you could have said the same thing about graphical operating systems in the 80s, and we all know how that turned out.)

        Looking at Microsoft, Ballmer has kept them at the top of the software industry, achieved solid profit growth and kept the share price broadly in line with the Nasdaq. Under Ballmer, Windows Server overtook Unix (measured by server hardware revenue) around 2005/06, stayed well ahead of Linux and now commands the majority of the server market, both by hardware revenue and by units. Server software has become a third cash cow for Microsoft (along with desktop Windows and Office). In consumer devices and even tablet PCs, on the other hand, Microsoft have done poorly (apart from Xbox and Kinect).

        Even with their consumer failures, Microsoft have still produced considerably more profit over Ballmer's tenure than Apple have over Jobs's. Apple are now in front, and if they stay there (and Jobs remains healthy), that will eventually change, but the idea that not doing as well as Apple (which applies to just about every firm in existence right now) constitutes failure is absurd. Performing in line with the broader market when you're at the top of your industry (and one of the most profitable firms in the world) simply isn't failure by any reasonable standard.

        Is Ballmer to blame for Microsoft's relatively poor performance in most consumer markets? I don't know. With the changes he's made to management over the last few years, and the departure of much of the Microsoft old guard management, we'll probably soon find out. Windows 8 on tablets and the Windows/Nokia partnership are the big tests.
        WilErz
    • Investors can care less about profits, they want dividends...

      @pedroroque : I think you are hidden on a cave, or not aware that the public company rationale does not revolve around productivity, revenue or profits.<br><br>It revolves around ROI, dividends and market cap. If your company reports 26 billion Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), which is most certainly what they are reporting, it doesn't translate to much at the stock market.<br><br>Take a look at LinkedIn, with stock price at US$90 with profit of only $93.9 million. Or Facebook with a market cap of $25 billion against the $219 billion from Microsoft. Talk about an underperformer. <br><br>That's the reasons CEOs go. Not revenue not profit. Why? 'Cause that can go in an instant. Ask Acer.
      cosuna
    • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

      because Loverock Davidson told me to stay the course ........ annd I will always do what ever Loverock tells me to do. :-)
      Over and Out
  • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

    He certainly doesn't lack the energy, but Ballmer has missed quite a few tech booms.
    The one and only, Cylon Centurion
    • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

      @Cylon Centurion agree, he seems to have problem of vision, which is one huge and single factor is hindering Microsoft from leading the market in many areas. Just to give an example, if Windows phone would have been in market before iPhone, I have no doubt it would have done so well. Bill Gates pointed multiple times in early 2000's that tablet is next big thing, but since he started concentrating on his own Belinda/Gates Foundation, I think he hardly bothered to focus on Microsoft and Ballmer took it lightly, point is Bill Gates had vision, but that does not seem to be the case with Ballmer. <br><br>Bill should have had better friends..:-) lol..
      animageofmine1
      • RE: Microsoft's Ballmer: And I'm telling you, I'm not going

        @animageofmine1
        Kids coming here to cry about their spilled kool-aid again. Why all the concerned about balmeer from none Microsoft owners and/or enthusist. I recognize some of the names and you pretend to be Apple and Linux users. But stop crying, I have said many times that as long as Mr. Ballmer continues to make money and carry out Microsoft's mision, he can stay until he is carried out in a box. Now it appears that he believe and/or has been told the same thing. So, put away your hankies and do not cry for Mr. Ballmer. Put your Microsoft face and game on and enjoy electronic bliss! Just saying!
        eargasm