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Originally published November 15, 2011 at 7:39 PM | Page modified November 16, 2011 at 11:41 AM

Sluggish stock price overshadows Ballmer's message at Microsoft meeting

At Microsoft's annual shareholders meeting Tuesday, CEO Steve Ballmer presented an optimistic take on the company's present and future success, but some shareholders grumbled about the stagnant stock price and the company's large stockpile of cash.

Seattle Times technology reporter

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There seemed to be something of a disconnect between Microsoft executives and some attendees at the annual meeting of Microsoft shareholders Tuesday at Bellevue's Meydenbauer Center.

While Chief Executive Steve Ballmer spent some 20 minutes emphasizing the company's current successes and presenting his optimistic take on its future, the 15-minute question-and-answer session afterward produced some shareholder grumbling about the stagnant stock price and Microsoft's large stockpile of cash.

Ballmer began by talking about the past fiscal year, in which the company logged nearly $70 billion in revenue, making $23.2 billion in profit. "We delivered record financial performance," he said.

Ballmer touted Windows 7 and fast-selling Office 2010, as well as the company's moves to respond to a fast-changing industry.

Businesses are increasingly moving to the cloud, he noted, and Microsoft is investing in that with its Office 365 and Windows Azure offerings, as well as with the forthcoming Windows Server 8, which Ballmer said got an enthusiastic reception at a developers preview.

Among Microsoft's consumer products, Ballmer talked about the success of the Xbox and said, "We're clearly on the right path with Bing," the search engine that's part of a division seeing heavy losses, though that loss narrowed this past quarter.

Windows Phone, which has been out a year, has managed to attract only about 2 percent of the worldwide smartphone market. But Ballmer was bullish on its future, touting Microsoft's partnership with Nokia.

Microsoft, which recently closed its acquisition of Internet phone company Skype, intends to make Skype better, as well as making other Microsoft products better with Skype, he said.

And he talked about how the forthcoming Windows 8 will power everything from tablets to desktop computers.

Shareholders, however, focused largely on Microsoft's flat stock price, which has remained in the $20 to $30 range for much of the past decade, as well as Microsoft's large cash stockpile — about $57 billion.

They wanted to know why the company is not paying higher dividends. (In September, Microsoft did increase the quarterly divided to 20 cents per share, up from 16 cents.)

"Shareholders own the company," one person asked. "Why don't you treat us as owners," giving shareholders a higher dividend when Microsoft makes more profit?

But the company's philosophy is to balance dividends to shareholders with being able to invest in long-term success, said Chief Financial Officer Peter Klein.

Chairman Bill Gates defended that tack.

"You want to retain enough that the company can take big risks" even in the face of economic uncertainty, he said. "The big thing is the new products and the volume of those products."

Asked if Microsoft should be split up to increase shareholder value, Ballmer said that wouldn't make sense because there's a lot of technological and business synergy across the company and that Microsoft "doesn't invest in things which are idly independent."

In response to a question about whether we now live in a post-PC world, Ballmer said: "We are in the Windows era. We were, we are, and we always will be."

Shareholders voted on a few routine items, re-electing the slate of board members and ratifying Deloitte & Touche as the company's independent auditors.

They also approved (on a nonbinding basis) compensation for executives, including Ballmer, and approved holding such advisory votes once a year rather than every three years.

They voted down a shareholder proposal from Harrington Investments to establish a board committee on environmental sustainability.

When the conclusion of the brisk, hourlong meeting was announced, an irate shareholder shouted: "Why does that conclude the meeting? Why don't you continue taking questions?"

The meeting was scheduled for this amount of time, was the reply.

Microsoft shares closed Tuesday at $26.74, up 18 cents.

Janet I. Tu: 206-464-2272 or jtu@seattletimes.com. On Twitter @janettu.

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