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Microsoft tells Wall Street it's maturing, not slowing down

By KIM PETERSON
Seattle Times technology reporter

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The message, repeated over and over by executives, was that, yes, Microsoft is a maturing company that makes big dividend payouts, and, yes, growth is slowing down but it still does laps around other companies.

"The kinds of work we're doing, we're doing fantastic stuff," said Chief Executive Steve Ballmer, who said he was more excited now than at any previous analyst meeting since he became CEO in 2000. "I can see incredible opportunities for a dynamic, exciting company like Microsoft in the world in which we live."

Microsoft made $13.8 billion in operating income in the past 12 months, Ballmer said. He wouldn't directly say how he expected that to grow in the next four years but suggested it would compare favorably with the entire operating incomes of companies like Nokia, Siemens or even Intel. "We certainly want to be the ones making the most money at the end of the day," Ballmer said. "We have to push ourselves in that regard."

The company increased revenue by about $4.6 billion in the past 12 months compared with the year before, said Chief Financial Officer John Connors.

"That's a couple of Yahoos! and more than one eBay," he said. "A pretty darn good year."

Microsoft didn't have much news yesterday. In the past, it has used the meeting to disclose its hiring plans and research budget for the next year. This year, it had already announced those numbers.

Without major news, executives gave an overview of current and future products.

Yusuf Mehdi, a corporate vice president in the MSN division, demonstrated an early version of software that can search the Internet and a computer's hard drive. As easy as it sounds, performing such searches quickly and effectively has been a technical challenge for everyone from Microsoft to Google. Other presenters showed off the next version of the Tablet PC operating system and the upgrade to the Windows XP operating system, Windows XP Service Pack 2.

The day's underlying message was Microsoft was not lumbering into middle age. It is widely regarded as a maturing company, a perception bolstered by the $3-per-share special-dividend payout it recently announced.

But even as it is maturing, it can still hire young workers, make money and outperform its competitors, executives said. "People don't want to come here to work for some stodgy old middle-aged company," Ballmer said. "People come here to work for a dynamic company, a company that's striving to change the world."
 
Michael Cohen, Pacific American Securities' research director, said Microsoft has a huge revenue base and can afford to invest in new areas of potential income.

"There was clearly a theme of innovation and expanding into adjacent markets," he said about yesterday. "What [Ballmer] is describing is a company that's going to go after every growth opportunity in its reach."

Chairman Bill Gates said Microsoft plans to apply for 3,000 patents this year, up from about 1,000 in 2001.

Money is not a limiting factor in Microsoft's activities, Gates said. Instead, the company is limited only by its creativity and its ability to hire talented workers.

"Many software companies don't broaden out, don't think about what they're doing in a comprehensive enough way," he said.

Brier Dudley: 206-515-5687 or bdudley@seattletimes.com