New Microsoft products produce more bullish assessment

Microsoft executives gave shareholders an upbeat assessment of the company's growth prospects Tuesday ahead of a huge wave of product launches in the next 12 months.

Chairman Bill Gates and CEO Steve Ballmer talked up the Zune media player — which went on sale Tuesday — and new versions of Microsoft's flagship products, Windows Vista and Office 2007.

"We believe that these new products will spark renewed interest in purchasing new PCs and owning new devices, and, perhaps most importantly for our shareholders, in acquiring the latest technology from Microsoft," Ballmer said.

Investors at previous years' meetings complained to executives about the company's flat stock price. But many Tuesday seemed content with the company's performance and were anticipating gains in the near future.

"I think they're headed in the right direction," said Fran Jerdee, of Puyallup, who said she has owned shares since the company went public in 1986. "A lot of people believe, like we do, that [the stock price] will go up with what they've got coming into the market."

But the first shareholder question was about whether the board of directors planned to raise the dividend — a payout Microsoft never made when its stock was flying high. The underlying message is that some shareholders don't see Microsoft as the growth engine it once was, even though revenue was up 11 percent in the 2006 fiscal year.

Ballmer said the board regularly considers the dividend amount.

Both he and Gates emphasized that Microsoft has lots of room to grow as it enters entertainment and online-services areas. Microsoft's Live initiative — a blend of software delivered over the Internet and on the desktop — will get more attention now that Vista and Office 2007 are out the door.

"The launch of those products frees us up to do even more new things," Gates said. "A lot of our focus will be on taking Live ... to the next level."

Charlie Stone, of Parksville, B.C., said he bought Microsoft's stock last spring after the company announced plans to increase its spending on several fronts. The news at the end of April sent shares on their biggest one-day slide in five years.

"It is a bit concerning," Stone said of the company's big spending on new businesses. "Should they always try to compete against everyone? Is it worth it? So that's the risky part, but I think overall it's a reasonable investment."

Shareholders also took care of business during the meeting at Meydenbauer Center in Bellevue.

They overwhelmingly re-elected nine directors, rejected three shareholder proposals and ratified Deloitte & Touche as the company's independent auditor.

One of the rejected proposals sought to bar Microsoft from selling products to governments that may use them in human- or labor-rights abuses.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com