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May 30, 2006

Steve Ballmer does Wall Street

Posted by David Hunter at 10:33 AM ET.

Bloomberg News:

Microsoft Corp.’s Steve Ballmer is heading to Wall Street to meet with analysts and investors in an effort to blunt criticism that he’s ignoring shareholders.

This may be a cross cultural experience for all involved, since Mr. Ballmer famously told shareholders that Microsoft “measures its success by its products, not its share price.”

The chief executive officer of the world’s biggest software maker will spend two days this week giving speeches and hosting small gatherings in an effort to persuade shareholders that his new spending plan will help bolster the stock price.

“He’s not spending enough time listening to people in the capital markets,” said Michael Holland, who oversees $4 billion as chairman of Holland & Co. and has owned Microsoft shares since he founded the firm in 1995. “What I want to hear is how much he listens. I want to see how well he does not being defensive and adversarial but being interested in hearing people.”

Ballmer, who will host events with investors in New York tomorrow and in Boston the following day, has never done anything like this in his six-year tenure as CEO, spokesman Tom Pilla said. Investors want him to respond to calls to boost the stock by using Microsoft’s $34.8 billion cash hoard to buy back shares.

Shares of Redmond, Washington-based Microsoft are trading near their lowest in 3 1/2 years. The stock is the third-worst performer in the Dow Jones Industrial Average in 2006.

We’ve mentioned the desire for a buyback previously, and some suggestions from fund managers quoted in the article include Microsoft taking on $40 billion in debt for a $75 billion total buyback or using the yearly $15-17 billion free cash flow plus more for annual buybacks. That’ll certainly put a dent in even Microsoft’s piggy bank and would be an impediment to management’s desire to use the loot for capital expenditures and expenses in their self-declared Web war with Google et al. Here’s the net:

“Microsoft isn’t a private company, and they need to worry about the stock price,” Holland said. “If Ballmer is dismissive of the idea, it’s a bad sign.”

More details on the Ballmer agenda by following the link.

Filed under Coopetition, Executives, Financial, General Business, Google, Investor Relations, Microsoft, Steve Ballmer

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One Response to “Steve Ballmer does Wall Street”

  1. Ballmer offers cold comfort to Microsoft investors -- Microsoft News Tracker Says:

    [...] 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. [...]

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