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

20 years ago

“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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