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Monday, July 31, 2006 - Page updated at 12:00 AM

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Brier Dudley

Ballmer's Range Rover may signal a change

Seattle Times staff columnist

Something had changed at Microsoft, but I couldn't put my finger on it until I saw Steve Ballmer climb into a flashy new Range Rover.

Ballmer is big and blustery, but he's also sensitive to how he's perceived, so I try to keep an eye on his wheels — especially when Microsoft's putting on a show as it was Thursday at its annual financial analysts meeting. While Bill Gates has a penchant for Porsches, Ballmer has always driven a stodgy sedan that projects an air of frugality.

He cut loose a few years ago after becoming chief executive, and upgraded from a Mercury to a Lincoln — still from his native Detroit, where his father was a manager at Ford.

So I was taken aback when I saw Ballmer stroll over to the $80,000 rig parked outside the meeting at Microsoft's conference center.

There was definitely a skip in his step, and he juggled his keys in the sun. But I couldn't tell if he was excited about the vehicle or glad to be leaving the crowd that didn't cheer his upbeat sermons and shrugged at overtures like the $100 billion in dividends and stock buybacks over the past few years.

Maybe I'm reading too much into it, but I took the Rover as a sign Ballmer and Microsoft have turned a midlife corner and no longer care quite as much what Wall Street thinks about them.

The feelings are mutual, judging from the reaction at last week's meeting. Analysts were only mildly pleased with the $20 billion stock buyback happening in August, even though it's five times larger than any tender offer in corporate history.

They were intrigued by Zune, the iPod competitor, but skeptical about whether it will succeed.

The biggest applause of the day came when they saw the photo-manipulation software of Seadragon Software, a Ballard startup Microsoft acquired in January.

FAM, as the company calls the analyst meeting, is the biggest event of the year for professional Microsoft watchers.

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The event used to stretch on into the night as dozens of analysts crowded around Gates and Ballmer, hanging on every word. On Thursday they still clustered around Ballmer, but Gates didn't come, and most left before the cocktail hour.

I can see why both sides may be getting tired of the routine.

Microsoft has a good story to tell. It's spending more on dividends and buybacks than any company in history. It still has enough cash to keep hiring, invest and produce new versions of all its key products.

It's strong in developing countries, where sales are growing faster than in the U.S. and Europe.

The server division alone is remarkable and proof the company can diversify beyond the PC.

Xbox may overtake Sony, and phone companies are embracing Microsoft's platform for delivering video over the Internet.

But the overriding message at the past several analyst meetings has been Microsoft is making big, long-term investments that won't pay off immediately.

That's getting tiresome for analysts. Most of them had advised clients that Microsoft stock would finally pick up this year when new versions of Windows and Office arrived, but now the broad release is delayed until January 2007.

No wonder they didn't get as excited as Ballmer when he outlined bold plans and services challenging Google.

I doubt he cared that much.

Brier Dudley's column appears Mondays. Reach him at 206-515-5687 or bdudley@seattletimes.com.

Copyright © 2006 The Seattle Times Company

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