Microsoft held its annual shareholder meeting this morning at Meydenbauer Center in Bellevue to a sunnier outlook overall, except for shareholder questions about the popularity of Macs and iPhones.

Chief Executive Steve Ballmer looked backward and forward in his address:

"There's no doubt that fiscal year 2009 was one of the most challenging we've ever face. The economic reset had a major impact on companies around the globe and Microsoft was certainly no exception," he said.

While "we saw revenue decline for the first time in the company's history, fiscal year 2009 was actually a good year in terms of execution and fiscal management," pointing to the launch of Bing, Zune HD and other products. Windows 7 came out in October, which was after fiscal year 2010 began.

"Today we're certainly more efficient, definitely more agile and definitely more competitive than ever." The company beat analyst estimates in the first quarter of 2010 that ended Sept. 30.

And in the long, long term: "When we meet back here in 10 more years, we will look back and say, 'Wow, wasn't technology really primitive in 2009? Computers didn't recognize our speech, they didn't recognize our gestures .. we didn't have instantaneous access to the world's information, we still used pen and paper.' ... Microsoft is investing to be at the forefront of these changes."

About 400 shareholders, mostly retirees, attended the meeting.

Some highlights from the shareholder Q&A session:

One man said Microsoft shares had done well for him. But his kids are now in college and they all have Macs. They think Microsoft is stodgy and the Apple ads make Microsoft look like a "buffoon."

Ballmer's response: "The truth of the matter is we do quite well, even among college students. Do we have an opportunity for improvement? We do. Some of that is marketing, some of that is phase of life. Ninety-six times out of 100, people choose a PC with Windows. ... Mac has picked up a couple of tenths of a percent of market share last year. But every tenths of a percent MATTERS."

Another shareholder said Microsoft needs a stronger mobile product to compete with Apple's iPhone and Google's Android.

Ballmer's response: "Good question. We have greater market share to Google Android. ... Our objective is to have a leading position among these competitors. We have just recently launched a new generation of Windows phones with new software. We are going to keep making investments, we have a lot of oppportunity. We're on the right strategy, which is to focus on building the software for the phones, not (building) the phones."

Ken Hutcherson, the vocal pastor from Redmond who opposes gay-marriage rights, spoke at length supporting a shareholder proposal that would require the company to disclose who it makes charitable donations to. He wanted to know specifically which gay-rights nonprofits the company gives to. Microsoft made large donations to campaigns to approve Ref. 71 this year, extending domestic-partner benefits. The proposal failed to win shareholder approval.

Bill Gates made nary a peep at the one-hour meeting, even though he was seated on stage with Ballmer, Chief Financial Officer Chris Liddell and General Counsel Brad Smith.

• All nine directors were re-elected. The seat vacated by James Cash's retirement was not immediately filled.
• Deloitte & Touche was selected as Microsoft's independent auditor.
• Shareholders approved changing the articles of incorporation to allow major shareholders to call a special meeting.
• Shareholders also approved an advisory vote for new executive compensation, also known as say on pay. This refers to shareholders having a say on pay. (This is not like my dad's philosophy of say on pay, which he calls, "You say, you pay." If you get to say where we're eating dinner, you get to pay.)

One other shareholder initiative failed:

• A statement of support for universal health care proposed by the AFL-CIO, received four percent of the yes votes.

The meeting was a rather spartan affair, with only Ballmer's occasionally shouting words to liven it up. There wasn't even a Powerpoint to spice things up. Shareholders got free coffee and a breakfast buffet.

Starbucks, another local shop, has put Tony Bennett on stage during their shareholder meeting and piped in Paul McCartney by satellite. The company usually sends everyone home with goodie bags.

Earlier this week, Microsoft gave everyone a free touchscreen laptop to everyone at the Professional Developers Conference in Los Angeles. (Full disclosure: To maintain our independence as members of the press, The Seattle Times newsroom has a strict gift-acceptance policy: We accept no work-connected gifts or gratuities of significant value. Gifts of insignificant value – key chains, pens, calendars, etc. – may be kept if it is impractical or awkward to return them.)

Here are my earlier livetweets from the meeting, and here is an earlier story we ran Wednesday with some interesting thoughts from CFO Chris Liddell.