Microsoft Sales Are Up, Gates Is Off

[Sunite]

Microsoft Sales Are Up, Gates Is Off
By Jay Greene
November 15, 2007 9:41AM

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On Gates' watch, Microsoft became the world's largest maker of software, employing more than 78,000 people and creating the code that's used on some 1 billion PCs around the globe. By 2000, around the time its market value peaked, Microsoft had created an estimated 10,000 millionaires, according to an economist hired by the company to study its impact on Washington State.

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   Microsoft
   Bill Gates
   Windows
   Steve Ballmer

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   In his last shareholder meeting as a full-time employee, Microsoft Relevant Products/Services Chairman William Gates spent little time dwelling on the significance of the moment. It's been more than a year since Gates said he'd step down from his role at Microsoft to focus on philanthropy beginning July 1, 2008.

But it was only toward the end of presentation at the company's annual meeting on Nov. 13 that Gates briefly reflected. "This is the dream we started Microsoft 30 years ago to pursue," Gates said of the long-term bets being placed by Microsoft researchers. Next year, he noted, he'd be at the meeting as a "part-time chairman."

As the company heads into the final year of Gates' tenure, Microsoft is regaining part of the luster it has lost since the beginning of the decade. It still trails rivals such as Google and Apple in key new markets, including online advertising and digital music. Still, sales jumped 27% in the quarter ended Sept. 30, a gain analysts consider astonishing considering Microsoft's size.

Buoyant Shares and Sales

And CEO Steven Ballmer said planned introductions of products -- ranging from the second generation of the Zune digital music player to software developer tools to servers for running corporate networks -- will help the company continue growing. "I believe we've laid the foundation for significant growth for Microsoft," Ballmer said.

That, coupled with the $31 billion returned to shareholders last year through stock repurchases and dividends, has helped push shares to levels not seen since the early part of the decade. Earlier this month, the company's stock rose as high as $37.50, the highest since July, 2000. "We're confident we can continue this momentum throughout the fiscal year," Ballmer said.

Indeed, shares closed on Nov. 13 at $34.46, up $1.19 for the day and almost $5 since the beginning of 2007. Recent results have been buoyed by better-than-expected PC sales, which, in turn, boost sales of Microsoft's Windows and Office software monopolies. Researchers at Gartner are projecting 11% growth in PC shipments in 2008 and 11.6% growth in 2009. Microsoft's Halo 3 video game title scored the best entertainment title opening ever when it debuted Sept. 25.

10,000 Millionaires

What's more, Microsoft isn't standing by as Google seeks to widen its dominance of online advertising. Microsoft made its largest acquisition ever this year, buying Internet advertising network aQuantive for $6 billion in May, to expand in the burgeoning market for selling and placing ads on Web sites. It also beat out Google in a contest for a stake in the social network Facebook. (continued...)

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