Microsoft CEO Steve Ballmer responded to frustrated stockholders by saying splitting Microsoft into smaller companies would curb its competitive edge.
Microsoft CEO Steve Ballmer told investors Nov. 15 that
breaking up the company would weaken its ability to compete against the likes
of Apple and Google. Some shareholders have been suggesting Microsoft break
into smaller independent units as a way of boosting its stock price, which
remains largely stagnant.
During a question-and-answer session at Microsoft's annual
shareholder meeting, reports
The Wall Street Journal, Ballmer said that splitting the company along its
divisions "means creating a harder time competing for all relevant parties."
That came in response to a self-described "frustrated" shareholder, who asked
whether a split-up should be considered.
Microsoft recently announced strong results for the first
fiscal quarter 2011, with revenues of $16.20 billion and net income of $5.41
billion. That represents a 25 percent rise in revenues over the same quarter
last year, when the company wrestled with a recession-driven lack of spending.
The company claimed year-over-year growth in all business segments, although it
still relies on traditional product lines such as Windows and Office for the
majority of its revenue.
Microsoft is pursuing an "all in" strategy with cloud-based
services such as Office Web Apps and Windows Azure, although those initiatives
have yet to generate the same substantial cash flow as Xbox or Windows 7. The
company is also trying to reverse its declining market share in smartphones
with Windows Phone 7, its competitor to Google Android and the Apple iPhone.
Ballmer has also tasked himself with reorganizing
Microsoft's upper echelons, recently naming three new presidents to key
divisions within the company. That follows the departures of several key
executives, including
former Microsoft Business Division president Stephen Elop. Chief Software
Architect Ray Ozzie also announced he is leaving the
company.
During the shareholder meeting, Ballmer defended his plans
to sell 75 million shares of Microsoft by the end of 2010. He holds around 4
percent of the company's stock, second only to former CEO Bill Gates with just
over 7 percent.
"Both Bill and I retain very substantial interests in the
company," Ballmer
reportedly told the audience. "If you look at the amount of shares sold by
insiders it's really a very small percentage of all the shares that sell, it's
not a material factor in the stock price."
Gates routinely divests himself of Microsoft shares to help
fund his Foundation, which pursues philanthropic endeavors in a number of
countries.
Nicholas Kolakowski is a staff editor at eWEEK, covering Microsoft and other companies in the enterprise space, as well as evolving technology such as tablet PCs. His work has appeared in The Washington Post, Playboy, WebMD, AARP the Magazine, AutoWeek, Washington City Paper, Trader Monthly, and Private Air. He lives in Brooklyn, New York.
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