Microsoft CEO Steve Ballmer’s excellent adventure on Wall Street got off to a predictable start today. Daisuke Wakabayashi at Reuters:
Under pressure from Microsoft Corp. investors to return a portion of the company’s $35 billion cash reserve and revive a flagging share price, Chief Executive Steve Ballmer on Wednesday defended the company’s “first-class problem” of having too much cash.
Ballmer, speaking to investors at the Sanford C. Bernstein Strategic Decisions conference, said Microsoft prefers to have the cash on hand in order to take risks on new technology and other things important to the company’s operations.
“It is likely I will continue to have to discuss with you for many years why we have as much cash as we do,” Ballmer said on a Web cast. “At the same time, I think it’s fair to say we want to return cash to shareholders.”
While he didn’t break out Microsoft’s wallet, he did remind the audience of past largesse:
Ballmer noted that Microsoft has returned $87 billion in cash to shareholders since June 30, 2001, but said he understands shareholder wishes to see more of the company’s cash through dividends and share buybacks.
Microsoft began paying a yearly dividend to shareholders in 2003 for the first time since it went public in 1986, and in 2004 paid out $32 billion in a special dividend of $3 a share.
“At the end of the day, the cash belongs to the investors. We are not going to blow that. We are not going to screw around with that,” Ballmer said in a rare appearance at an investor conference.
I believe that is the equivalent of “all our bets pay off,” but then Mr. Ballmer is always exuberant.
Practically, it’s once again the argument of whether Microsoft is a growth stock or a value stock. Management says “growth” and investors are saying “value.” Since the chances of the investors replacing top management are low, the disconnect between the two likely implies that the share price will continue to languish. In the long run, we’ll get to see who’s right.
Disclaimer: If you somehow view any of the above as investment advice, you shouldn’t.
Update 6/14: I just discovered Mitch Ratcliffe’s interesting analysis of the whole Ballmer gestalt which is indicative of the credibility problems that Microsoft executive management is currently facing with investors.