Microsoft CFO to exit after tough year of cost-cutting

Twelve months after Microsoft slid into the worst economic recession in the company's history, Chief Financial Officer Chris Liddell is leaving and ready to be more than a numbers guy.

The announcement came Tuesday after Liddell spent the year cutting $3 billion in expenses, including the first major layoff at a company historically known as a center for job growth.

The company's stock price is near a 52-week high, and investors seemed pleased with Liddell's comments at Microsoft's annual shareholders meeting last Thursday.

The same day, Liddell formally told CEO Steve Ballmer that he planned to leave at the end of the year.

Peter Klein, CFO of Microsoft's Business division, will take over at the beginning of 2010.

Liddell, 51, a native of New Zealand, is "exploring a number of opportunities," said Microsoft spokesman Mark Murray. Liddell was vague on specifics in a news release about his departure, which said he wanted to "expand his career beyond being a CFO."

In an e-mail sent to all employees, Ballmer said Liddell "has provided excellent leadership. He has built a finance team that is deep and strong, and has a [sic] outstanding record of building value for our shareholders."

Microsoft stock closed at $29.91 a share Tuesday. It fell slightly in after-hours trading, when the news was announced.

"Fine job"

"I think he's done a fine job," McAdams Wright Ragen analyst Sid Parakh said of Liddell's tenure.

"Just last year, he's kind of tried to address some of the long-standing investor concerns," Parakh said. "Clearly from a cost perspective, what they've done over the last year — reduced $3 billion in costs — that's fairly commendable."

Liddell has said that even though the financial circumstances have been difficult, the company performed well, rolling out products and controlling costs during the past 12 months.

In a Nov. 16 interview, Liddell said, "If you think about it, it's been an amazing year. A year ago we were in the middle of what potentially looked like the worst financial meltdown of our generation."

Now, he said, "Whilst we've still got lots of challenges, it's clearly a much improved situation."

Microsoft recently finished cutting 5,800 jobs, leaving the overall head count at about 90,000.

Revenue fell for the first time in the company's history under Liddell's watch, from $60.4 billion in 2008 to $58.4 billion in 2009. Shareholders are more used to seeing the sales double every few years.

Still, Microsoft was able to beat analyst expectations in the quarter ended Sept. 30 by cutting costs.

"From my perspective as CFO — and I'm not minimizing at all the individual pain associated with people leaving the company — the company is actually performing extremely well," Liddell said in last week's interview.

"The products are going out on time, market acceptance is very good, the revenue trends on a relative basis are starting to look very good, costs are under control and cash flow remains very strong."

Flood of new products

The company just shipped Windows 7, and major products such as Office 2010, Windows Azure and Windows Mobile 7.0 are expected to hit the market in 2010.

The one danger Microsoft faces is that the economy has not improved much, even though it seems to have bottomed out.

Liddell joined Microsoft in April 2005, after serving as chief financial officer of International Paper. Before that, he was chief executive of Carter Holt Harvey, a publicly traded forestry company in New Zealand.

In fiscal 2009, Liddell earned $3.5 million, including a base salary of $561,667, a $595,018 cash incentive and $2.4 million in stock incentives. That was down 26 percent from 2008.

Klein, 47, will receive an annual base salary of $500,000 a year and will be eligible for a stock-and-cash incentive package when the 2010 fiscal year ends June 30.

In his e-mail, Ballmer called Klein "an eight-year Microsoft veteran who brings great finance experience and a deep understanding of the company."

Klein ascends from the CFO seat for Microsoft Business division, which makes Office software. He previously served as CFO of the company's Server and Tools Business group.

Before joining Microsoft in 2002, Klein worked for several Seattle-area companies, including McCaw Cellular, private equity firm Orca Bay Capital and startups such as HomeGrocer.com, Terabeam Networks and Asta Networks.

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

A previous version of this story, published November 25, 2009 and corrected November 25, 2009, gave an incorrect number for the amount revenue fell under Lidell's watch. It fell from from $60.4 billion in 2008 to $58.4 billion in 2009.