Microsoft CEO Ballmer defends “Microsoft’s ‘first-class problem’ of having too much cash

“Under pressure from Microsoft Corp. investors to return a portion of the company’s $35 billion cash reserve and revive a flagging share price, Chief Executive Steve Ballmer Wednesday defended the company’s ‘first-class problem’ of having too much cash,” Reuters reports. “Ballmer, speaking to investors at the Sanford C. Bernstein Strategic Decisions conference, said Microsoft prefers to have the cash on hand in order to take risks on new technology and other things important to the company’s operations.”

“Microsoft surprised investors in late April by announcing that it would sacrifice billions in profit next year to invest in new business areas. Analysts estimated that the company planned to spend $2 billion more than initial forecasts. The share price fell on the news, marking the latest decline for a stock that has underperformed every major U.S. equity index since the start of 2002,” Reuters reports. “Shares of Microsoft (up $0.10 to $23.25) rose in early trade on the Nasdaq. The shares are down 11 percent since the start of 2006.”

Full article here.

MacDailyNews Take: Just how much are towels, anyway? What are they spun gold? Seriously, it’s smart to keep a strong cash reserve for investments, but $35 billion? On the other hand, with bloated Microsoft’s obvious inefficiencies, even $35 billion might not be enough. Microsoft’s true “first-class problem” is the sales guy in the corner office who’s responsible for a stock chart that’s been flatlined for years. Hopefully, he stays as Microsoft’s CEO for as long as it takes.

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  1. Ballmer tried to use that picture of himself to get a big part in slither!

    Apparently they decided not to cast him as he was more horrific than the bugs and would take away all the limelight.

    Picked up a nick name though – ‘old slither lips’


  2. Can’t give up any of it. Not gonna happen.

    Every penny of that reserve is necessary for Bill Gates to take his weekly “money bath” treatment in his “money room” at the specially-built “money spa” made entirely of $100 bills molded and glued into construction materials.

  3. Translation from Ballmerese:

    Since we can’t make a product that anyone in his/her right mind would ever buy, we need that cash on hand to buy out those companies that understand what innovation truly means, to pay our partners (SCO) to file frivilous lawsuits to spread FUD, to make campaigh contributions (AKA bribes) to the GOP to avoid monopoly penalties, and to try to usurp standards organizations to make sure that they toe the Microsoft party line.

  4. Why does Ballmer need to keep so much cash?

    Because he’s is scared.

    He knows MS stopped innovating years ago and Office, Vista, .NET, etc are stagnant products.

    What’s next from MS?

    They need to wait for companies like Apple to innovate so they can copy. Ballmer knows this business model will eventually crash but if they have enough cash, they might be able to buy themselves out of extinction.

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