Bill Snyder at TheStreet.com catches Microsoft’s CFO Christopher Liddell at the Goldman Sachs technology investment conference:
Liddell also said “he’s very comfortable” with Microsoft’s ambitious schedule of launching new versions of Windows and Office by the end of the year. But sounding a note of caution, he warned investors not to expect too much too soon from the parade of new products. “There won’t be a huge pop (in sales)” initially, he said.
His warning seemed timely, because the market has been waiting for Microsoft’s stock to break out of its relatively narrow range for years, and some analysts seem to expect a move fairly soon.
A remarkably sensible view which is dictated by the mechanics of the client OS and office suite market. I’m sure there are considerable internal and external pressures to declare that Vista and Office 2007 will lead to a bonanza.
Liddell also poured a bit of cold water on hopes that Microsoft will move much faster to distribute cash to shareholders. “I’m not a fan of special dividends,” he said. “If I had to prioritize, share buybacks would be first.”
That answer didn’t sit well with the director of a large asset management company who questioned Liddell from the floor (and was thus anonymous under conference ground rules.) “Microsoft is still overcapitalized,” he said. “And that’s why the stock hasn’t moved,” he said.
He added that investors don’t want to see Microsoft embark on a series of acquisitions. “The market fears that Microsoft will throw a lot of money to buy media or Internet-related companies. “We’re strongly opposed,” he said.
And there’s the nut – if Microsoft did nothing but preserve its franchises, it would be a remarkable cash cow for the foreseeable future. If more of the loot were returned to the shareholders, they’d be happy campers. Of course, that path has well known dangers, but so does trying to manufacture or acquire growth. Right now it seems that the market and at least some of the shareholders don’t see much in the growth efforts and would rather have the cash.