Microsoft CEO Satya Nadella speaks at the meeting this morning. (GeekWire Photo / Todd Bishop)
Microsoft CEO Satya Nadella speaks at the meeting this morning. (GeekWire Photo / Todd Bishop)

BELLEVUE, Wash. — Microsoft is holding its annual shareholders meeting here this morning, and it’s notable in part because of who isn’t here: co-founder and board member Bill Gates, and former CEO Steve Ballmer, the company’s largest individual shareholder.

Microsoft Chairman John Thompson opens the meeting.
Microsoft Chairman John Thompson opens the meeting. (GeekWire Photo / Todd Bishop)

Both are said to have prior commitments — Ballmer is speaking at a Stanford University conference — so don’t read too much into it. But it’s the latest indication that this venerable tech company has entered a new era under CEO Satya Nadella.

“This last year has been a year of solid progress,” Nadella said in his opening remarks.

He went on to explain his belief that artificial intelligence will be a key underpinning of the company’s future products. “Our role is to ensure that the data is not just an exhaust but is converted into actual actionable insights and intelligence,” Nadella said, citing the importance of “ambient intelligence” in the company’s future technologies.

As part of that effort, Microsoft in September created a new 5,000-person engineering and research division focused on artificial intelligence.

Nadella talked about Microsoft’s increasing cooperation with Linux and other open-source projects. “It might surprise you to learn that Microsoft is one of the biggest contributors to open source today,” he said. He noted that Microsoft is “building Azure as the world’s first cloud supercomputer,” referring to an initiative announced recently to bring high-tech computer chips to the company’s data centers.

He also spoke about efforts to improve diversity at the company, which has been an ongoing struggle at Microsoft and across the tech industry. Technology demos at the meeting included accessibility features in Windows 10 for people with visual impairments and other disabilities.

Another indication of the changes at the company: the 12 percent increase in Microsoft’s share price over the past year. Microsoft is trading today above $60 a share, compared to less than $55 a share at this point last year. Nadella has been pushing the company further into cloud computing and artificial intelligence, and striking new partnerships and deals across the industry.

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Microsoft Graphic

The company posted $92 billion in revenue, down 2 percent, in its 2016 fiscal year, with profit of $22.3 billion, an increase of 3 percent.

“Last year was pivotal in our continued transformation,” said Amy Hood, the company’s chief financial officer, in her opening comments. She noted that the company completed 17 acquisitions across a range of industries over the past year.

FOLLOW-UP: Wielding their Windows Phones, Microsoft shareholders grill CEO Satya Nadella on device strategy

The biggest of those deals is the company’s pending $26 billion acquisition of LinkedIn, currently under European regulatory review, which is likely to be one of the topics here today. There are also two Microsoft Surface Studio desktop PCs on the stage, and shareholders got a demo after Nadella’s comments on the state of the company’s business.

During the shareholder Q&A at the meeting, one investor cited New England Patriots head coach Bill Belichick’s frustrations with Microsoft Surface tablets. “I can’t think of a better ambassador for Microsoft. He’s a user with demanding expectations and to many people he personifies excellence. … Let’s learn from the frustrations of users like Bill Belichick.”

Brad Smith, Microsoft president and chief legal officer, pointed out that it was “the most passionate statement” he’d ever heard supporting the Patriots in the Seattle region.

Other topics during the Q&A included Microsoft’s efforts to increase its use of renewable energy in its data centers and the rest of the company. Another shareholder took the mic with a Windows 10 complaint: “I don’t know what has happened to my photos. They used to be one place and … ” Microsoft executives promised to get her some help, and also noted the availability of support services at Microsoft Stores across the country.

Two Microsoft shareholders, both Windows Phone users, separately took to the mic to ask about the future of Microsoft’s own smartphones, which the company has pared back in recent years. Nadella said they aren’t getting out of the phone hardware business. “What we are going to do is focus that effort on places where we have differentiation,” he said.

The agenda for the meeting this year was straightforward, with the standard election of directors and only one shareholder proposal, for “shareholder proxy access enhancement,” which the company recommended a vote against. That proposal was turned down by shareholders, who also elected Microsoft’s slate of nominated board members.

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