Glass half full for Microsoft shareholders

Capping off one of the most difficult fiscal years in its history, Microsoft held its annual shareholders meeting with the backdrop of an economy that has at least stopped getting worse.

"There's no doubt that fiscal year 2009 was one of the most challenging we've ever faced," Chief Executive Steve Ballmer told shareholders. "The economic reset had a major impact on companies around the globe, and Microsoft was certainly no exception."

He then went on to talk about how 2009 was actually a good year in terms of execution and financial management, pointing to search engine Bing, Zune HD and other products. Last month Microsoft launched Windows 7, its latest operating system.

Microsoft shares opened at $29.99 Thursday morning and closed at $30.11, near a 52-week high. The stock's recent performance created a lighter mood at the meeting compared with last year.

"Today we're certainly more efficient, definitely more agile and definitely more competitive than ever," Ballmer said.

The company eliminated more than 5,000 jobs between January and this month. "That was certainly a difficult decision, and I don't want to minimize the impact on the people who were affected," Ballmer said.

The meeting, attended by about 400 people, mostly retirees, was a Spartan affair at the Meydenbauer Center in Bellevue, with Ballmer's occasionally shouting words to liven it up. Shareholders got free coffee and a breakfast buffet.

Compare that to another local shop, Starbucks, which has put Tony Bennett on stage during its annual meeting, not to mention handing out goody bags as shareholders depart.

A day earlier, Microsoft gave a free touch-screen laptop to those attending the Professional Developers Conference in Los Angeles.

Pete Schroeder, a shareholder since 1986, chastised the company for "sitting complacently with their market share" and letting Apple woo younger customers. The father of four said he's concerned that his college-age children and their friends are all going to be Mac buyers.

"The current Apple ads make you all look like a buffoon," Schroeder said during the question-and-answer session.

Ballmer responded: "Do we have an opportunity for improvement? We do. Some of that is marketing, some of that is phase of life. Ninety-six times out of 100, people choose a PC with Windows. ... Mac has picked up a couple of tenths of a percent of market share last year. But every tenth of a percent matters."

Investor Jonathan Yan, a University of Washington sophomore, said after the meeting that Macs are more popular on campus. Still, he thought the executives did a good job fielding questions.

"I was hoping to see Bill Gates talk," he said. "When I was younger I did biographies on Bill Gates."

The Microsoft chairman made nary a peep at the one-hour meeting, even though he was seated on stage with Ballmer, Chief Financial Officer Chris Liddell and General Counsel Brad Smith.

Another shareholder said Microsoft needs a stronger mobile product to compete with Apple's iPhone and Google's Android. Microsoft has repeatedly said its vision for the future of computing is three screens — a phone, a PC and the TV — connected by a cloud.

Ballmer said the company's objective "is to have a leading position among these competitors. ... We're on the right strategy, which is to focus on building the software for the phones, not [building] the phones."

During the question-and-answer period, the Parents Television Council applauded Microsoft for recently pulling its sponsorship of a "Family Guy" TV special.

Ken Hutcherson, the vocal pastor from Redmond who opposes gay-marriage rights, spoke in support of a shareholder proposal requiring Microsoft to disclose its charitable-donations recipients. He wanted to know specifically which gay-rights nonprofits the company gives to. The proposal failed.

Another shareholder initiative for Microsoft to make a statement of support on universal health care was rejected.

Other shareholder business included:

• Re-electing all nine directors. The seat vacated by James Cash's retirement was not immediately filled.

• Again selecting Deloitte & Touche as Microsoft's independent auditor.

• Approving changing the articles of incorporation to allow major shareholders to call a special meeting.

• Approving an advisory shareholder vote on executive compensation, also known as "say on pay."

Sharon Pian Chan: 206-464-2958 or schan@seattletimes.com