Microsoft CEO Steve Ballmer in Bellevue at the company's annual meeting this morning.

8:10 a.m.: I’m in Bellevue this morning for Microsoft’s annual meeting of shareholders, where CEO Steve Ballmer is currently giving the assembled crowd an overview of the company’s business, highlighting the growth of Windows, Office, Windows Server and other products over the past year.

You can watch the live stream via the company’s investor relations site. See this earlier post for the voting agenda. Continue reading for highlights as the event unfolds.

“Importantly, we grew our top and bottom lines, while continuing to invest in key areas for growth,” he said, predicting that the pace of change in the technology industry will continue to increase. “Microsoft is well positioned to embrace and drive those changes and expand our business.”

He noted that it has now been a decade since Microsoft entered the business applications market. “We’re starting this next decade with a great first quarter, where we saw our Dynamics business grow 17 percent.”

8:22 a.m.: Now Ballmer is talking about the growth of the company’s Xbox business, citing the fact that the console has become more generally accepted even in his family, as Kinect as broadened its own usage. The Xbox 360 is no longer banished to the basement in the Ballmer household, he said.

“There was a time when people thought we were crazy for getting into the Xbox business, and people thought we could never compete with Sony and Nintendo,” he said, citing the console’s status as No. 1 in the U.S. and saying it has “clear line of sight” to being the top console in the world.

8:25 a.m.: After showing an Xbox video, Ballmer calls Xbox an example of Microsoft’s ability to make long-term bets (read: spend billions to give itself a foothold) and work across disciplines among different product teams at the company.

8:27 a.m.: Ballmer transitions to the company’s Bing search engine, its effort to chase Google, presumably hoping that shareholders will see what has happened with Xbox and show patience. “We’re clearly on the right path with Bing, a path to profitability,” he says.

8:29 a.m.: Now he’s talking Windows Phone (which might require even more patience from shareholders). Ballmer touts favorable Gizmodo review, talks about exclusive Nokia smartphone partnership, promises first Nokia Windows Phones in the U.S. early next year, and ultimately serving a broad range of geographies and price points.

The company is “extremely optimistic” about Windows Phone, he says.

8:31 a.m.:  Ballmer talks about recent Skype acquisition, says company will use technology in part to make its existing products better.

8:32 a.m.: Now Ballmer is talking Windows 8, saying it will power devices from tablets to desktops. Assures shareholders that they can still use traditional mouse and keyboard and it will “work beautifully.” Windows Store will ship at the time of Windows 8 for Metro apps, he says.

8:34 a.m. “There’s never been a time since I’ve been at Microsoft that’s quite as exciting as now,” he says. Technology shifts right now in the industry are as “momentous as anything I’ve seen.” Company has seized some opportunities well and has made significant investments in others, he said.

He said to shareholders that Microsoft will “work hard to make that the best investment you’ve ever made.”

8:36 a.m.: Microsoft’s nine-member board has been re-elected. More than 98 percent of shareholders approve of executive compensation. Shareholders decide they want such a say on executive pay every year, now Microsoft’s board will take that into account. Shareholder proposal to establish board environmental committee, which had been opposed by the board, receives less than 4 percent of votes and isn’t approved.

Official business now adjourned, now the Q&A session.

First question: Why don’t you give us more dividends vs. buying back stock?

CFO Peter Klein: Company has taken a balanced approach, have had a very consistent approach over the years to do what’s right for shareholders and balance sheet through buybacks and dividends..

Second question: Why not split up the company to increase value?

Ballmer: The company doesn’t invest in things that are “idly independent.” Product teams work with one another, same graphics technology whether in automotive platform or in an Xbox. Consumerization of IT also creates connections across groups. Drawing arbitrary lines makes it harder to manage if you try to have different shareholding groups own, in essence, different parts of the company.

Third question: Another call for increasing the dividend. Also encourages shareholders to read Paul Allen’s comments about Microsoft in his book. Asks Bill Gates to talk about how Microsoft can increase its stock price.

Gates: The company needs to be able to take big risks even in the face of uncertainty. I’ve always been a big believer in having a strong balance sheet. Now other tech companies are adopting a similar approach. “The opportunity as the world’s best software company is very strong, strong as it’s ever been.”

Fourth question: Asking Microsoft to explain its approach in China and cooperation with censorship there.

Brad Smith, general counsel, talks about an organization that Microsoft is involved in with other companies, including Yahoo, that is guided by principles including the company’s need to comply with laws where it operates, but it’s also important to work to engage in a dialogue with governments and put in place safeguards to make sure it doesn’t go beyond what it needs to do to comply, and also to encourage change in areas such as freedom of expression.

Fifth question: Are we in the post-PC era?

Ballmer: “We are in the Windows era — we were, we are, and we always will be. … We are in an era in which the range of smart devices is continuing to expand. That’s a fantastic thing for Microsoft.”

Sixth question: Question about overseas cash and tax policy.

Peter Klein: In short term, a tax holiday probably beneficial, but only a short term fix.

Ballmer: Corporate taxes in U.S. gives incentive to U.S. companies to invest outside U.S., and there’s need for broader reform.

Seventh question: Ballmer is using a tablet, why can’t people buy quality Microsoft tablets today? Why Kindle Fire and iPad?

Ballmer: You can buy this today, Samsung tablet. (He happens to be running Windows 8 developer preview.)

Microsoft investor relations exec Bill Koefoed: Meeting is adjourned, shareholder objects from the back to the fact that it isn’t going longer. Koefoed says “we’ve got the meeting scheduled for this amount of time, sir, so thank you very much.”

That’s a wrap from the meeting.

Comments

  • http://twitter.com/Seattle_Startup Seattle Startup

    It would serve Microsoft much better to extend Q&A significantly   

  • Anonymous

    Did Steve mention that Windows 8 coming to phones ?? I heard something like that in the webcast..

    • http://geekwire.com Todd Bishop

      I don’t think so. From my personal notes, I have Ballmer saying, “Windows 8 will power a broader range of devices, from tablet computers to desktop.”

      • Anonymous

        Oh..Thanks. The webcast will be online soon, right ?? I can check it out later..

    • Guest

      I don’t believe this has been “officially” stated, but yes, the phones will be transition to w8 in a couple years, ans silver light orphaned as the Dev platform, unifing desktop app Dev w/ mobile.

    • Anonymous

      I heard the same thing: Ballmer said something about MS bringing Windows 8 to phones.

      Whether this is accurate or not, I heard him say it.

      • Anonymous

        Win8 on phones has been known about for months. MS has development tools for free download to work with phones.

    • http://geekwire.com Todd Bishop

      Matt Rosoff from Silicon Alley Insider is reporting the same thing you heard.

      http://www.businessinsider.com/windows-8-is-coming-to-phones-says-steve-ballmer-2011-11

      I just went back again to my notes from the Q&A. I heard it initially like this … 

      “We’ve got broad Windows initiatives, driving Windows down to the phone. With Windows 8 you’ll see incredible new form factors powered by Windows.”

      Note the period. But it could also be interpreted like this, as Matt did.

      “We’ve got broad Windows initiatives, driving Windows down to the phone with Windows 8. You’ll see incredible new form factors powered by Windows.”

      It sounds like you heard it that way, as well. I don’t know which Ballmer meant — whether this was an inadvertent slip-up revealing Microsoft’s plans or whether the SAI report is a misinterpretation of what he said. I’ve asked the company to clarify, but of course if it was a slip-up, it’s not in the company’s interest to say so.

      Thanks for bringing this up — nice to have some extra pairs of ears out there.

      • Anonymous

        Yeah..you are right. Even I heard it again. I already posted my comment on Matt’s post on SAI and on Liveside.

  • Guest

    I find it interesting that the shareholders meeting lasts under an hour, and the analysts briefing lasts all day. Kinda shows where the priorities are. Not that ms is unusual in this regard, I suspect.

  • Guest

    Congratulations to Steve for answering these banal, ill-informed questions in an intelligent and well-reasoned way. (The “post-PC era” catchphrase is as dead as the man who coined it, for example.)

    • Dude

      Is it? Perhaps from inside the Microsoft tent. Unfortunately for you the fact is that even if people don’t use the term, they are living in the spirit the term describes. Most of my non-tech-industry acquaintances don’t have desktop computers anymore and only use their laptops for work. Even I, a web developer, don’t bother getting my laptop out while relaxing in the evening anymore. Sorry, but no one cares about ‘Windows’. They just want their stir-fry recipes, netflix/youtube videos and their email nearby. That is what Post-PC means. It means people don’t think of their computers as a special thing anymore. Everything is a computer. Why can’t my fridge tell me if I have milk from the outside? Get that information on my phone? These are the computers that people care about – and they don’t even need a dedicated one on their desks anymore.

  • Guest

    I’d have more respect for Steve if he’d been honest about what was going well and what wasn’t. It works for Warren Buffet. There’s no reason Ballmer can’t do likewise.

    His prepared remarks gave the impression that MS was doing well across the company. It was so one-sided and inaccurate that it was actually laughable. Indeed, what he didn’t talk about is more revealing that what he did. Examples: the performance of the stock, the loss of MS’s market cap title in 2011, Windows market share losses during the year (more than in the previous decade combined if you include iPad/Android tablets), continued decline in MS’s mobile share despite the WP7 launch (including this month), Bing flat for several months now, the continued financial losses there, the fate of Yahoo and what impact that will have moving forward, etc.

    And the answers given to the questions posed by shareholders (the stock’s poor performance, splitting up the company to unlock shareholder value, whether buybacks are a good use of cash, what would it take to increase the stock price, and whether we’re in a “post-PC” world and what that means for MS now that it isn’t leading either smartphones or tablets) weren’t handled with anywhere near the seriousness they deserved. This is a company whose stock has been in a declining channel for eleven years and has performed below the market and lost money for the past two consecutively. It’s a company where growth now trails even IBM. Some degree of explanation and accountability should be expected. But instead the message from Ballmer was that MS is going to keep doing what hasn’t worked for investors for more than a decade and has led to MS’s vastly diminished relevance within the industry over that time frame.

     

    • Anonymous

      “the stock’s poor performance”

      Because we all know that stocks should grow infinitely.. That’s called a bubble. Anyway, MS pays dividends instead of stock growth. You get money back instead of seeing rising stock prices.

      “MS is going to keep doing what hasn’t worked for investors for more than a decade and has led to MS’s vastly diminished relevance within the industry over that time frame”

      MS has about 90%-95% of the market. Once you’ve saturated a market, there isn’t much room for growth. MS has been making consistent profits year over year.

      The stocks fluctuate because most stock traders want quick and easy money from a pump and dump, which is a bad long term strategy. Bad for the company and bad for society. But hey, if it’s good for traders.

      They may not be perfect, but they’re far from bad.

      They had something like 60+bil in revenue and 20+bil in profits in the last year alone.

      It boggles my mind how this is “Bad”. 

      • Guest

        “MS has about 90%-95% of the market.”

        Um, 90%-95% of which market?  Certainly not all of the markets that they compete in, unless you don’t consider Apple or Google competitors…

        http://www.wolframalpha.com/input/?i=aapl+profit+vs+msft

        • Anonymous

          whoops, I guess MS dropped below 90% market share in desktops early this year.. nvm. At least I was close.

          But good job being out of touch with computers for over a decade. MS being over 90% has been common knowledge for a long time. Since the Win95 era.

          “Windows’ market share now at 89.7%”(02/02/11)
          http://www.networkworld.com/community/blog/windows-drops-below-90-market-share

      • Anonymous

        i agree with you on this one. Its so sad that all people think about is profit and more profit even if it cant be sustained. AAPL is making great money, but that does not mean it will continue to. MSTF share price has been flat for a long time, but at least they pay dividends and from the looks of things they will continue to buy back shares because in all honesty, shareholders always have a way of distracting the vision of a company.
        If AAPL goes bust today, people will be  singing a whole different tune, because shareholders dont always know best and are fickle at most.

      • Guest

        “Anyway, MS pays dividends instead of stock growth. You get money back instead of seeing rising stock prices.”

        This year, last year, and for the last 11, the stock’s decline has more than offset any dividends paid out. If this is your investment thesis for MS, you’re going to lose a lot of money.

  • Guest

    “He said to shareholders that Microsoft will “work hard to make that the best investment you’ve ever made.””

    Just like he has over the last decade. Oh wait, nevermind.

  • http://larkforsure.wordpress.com Yuan Yi Peng

    [ Begging for helps ] Complaint about Human Rights Violations by IBM China on Centennial 

    Please Google:

    IBM detained mother of ex-employee on the day of centennial
           or
    How Much IBM Can Get Away with is the Responsibility of the Media 
           or
    Tragedy of Labor Rights Repression in IBM China

  • Guest

    Here’s Steve Ballmer’s plan for increasing MS’s share price:




    (crickets)

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