Microsoft shareholder asks Ballmer why she should keep her stock

The annual Microsoft stockholders meeting in Redmond, Washington was held earlier today and, as expected, there were only a few new nuggets of news that came out of the meeting. CEO Steve Ballmer told the assembled crowd that the company was now selling four times the number of Windows Phone products than it had in 2011 and that several apps for Windows 8 had already generated one million downloads.

The final portion of the meeting was devoted to the question and answer session, and Ballmer, Peter Kline, general counsel Brad Smith, and, yes, chairman and co-founder Bill Gates sat on stage, with a Surface tablet in front of each of them, to listen to the people who got lucky enough to ask questions to the executives before Microsoft ended the session less than an hour later. While Gates sat and listened to the stockholders' questions, he did not speak during the Q&A.

The first question came from stockholder Evie Schwan, shown above, who had a very simple thing to ask:

The stock went up, it split, it went to a hundred, and I thought wow, this will be my retirement, like a lot of people here. And it dropped to 30, and it has been there for ten years. So my question really is, why should I keep it? And please, no sales is hype. Just facts.

Ballmer told Schwan that he felt that Microsoft's revenue and profits had grown consistently over the years. He added:

The stock market's kind of a funny thing because there are times we seem to be doing those things very well and the stock market likes it. There are times we are doing those things and the stock market would seem to value it less .... I understand your comment. And yet I think if we stay focused in on the big prize, which is innovation, revenue and profit growth, we will have a chance to really prosper together.

Other questions posed by stockholders during the Q&A session concerned Microsoft's current anti-trust issues in Europe with Internet Explorer and the company's policies of trying to find and hire qualified people in the US versus bringing in workers from overseas.

Source: Microsoft shareholder meeting website | Image via Microsoft

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29 Comments

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MS should really buy her stocks back... to shut her up. It's kinda pointless.

If she didn't want them anymore, that's fine. MS can keep its own stocks for itself, or just sell them to its employees.

I agree with the posters above, Microsoft is judged for what they are, not for what they could be. Their stock prices barely budged even when MS was making record profits. I'm guessing that even if MS came to dominate the mobile world, tablets, and even the living room, people would still be wondering why the stock hasn't moved.

The problem isn't Microsoft -- it's that idiot woman. Full disclosure, I've worked in financial services for over ten years.

The stock market doesn't CARE about the value of a company, it cares about *perceived* value. Microsoft has excellent cash flows, low debt, lots of on-hand cash, and spends its money wisely through acquisitions, R&D investments, and marketing. Wall Street doesn't care because it doesn't drive interest.

You want the stock to be $100... that's just waiting to hit the lottery. When you invest you are supposed to diversify, so that one stock doesn't try break you. That's what happened to this woman. Over time with the addition of inflation and simple growth, you can get a return. You want to retire on your stock portfolio? Then you should be Warren Buffet. Everybody else who invests is trying to put a little away at a time over the period of many years in order to bolster their savings. The stock market CAN be a place where you hit it big, but it's also full of risks. This is one of them. You want a short term return because you're old and want to retire? Then you should have pulled your money out years ago.

Sorry, these people just irritate the hell out of me.

Shyatic,

Out of curiosity, are you a trader, an advisor, financial planner...?

I was just looking at the MSFT chart and I don't think it was a bad question to ask - at a shareholder meeting by a shareholder.
As per the chart, I show a decline of 6% over the past 10 years.

What surprises me is how you have responded.
It's a very common thing for people to invest with the expectation that they can retire using their stock portfolio to some/most extent.
It doesn't matter to me whether she put all her eggs in one basket or not - the fact is that it's a stagnant investment.
It would be foolish to expect an insane rate of return, but it would not be out of the ordinary to expect at least a positive rate of return.

Packet1009 said,
Shyatic,

Out of curiosity, are you a trader, an advisor, financial planner...?

I was just looking at the MSFT chart and I don't think it was a bad question to ask - at a shareholder meeting by a shareholder.
As per the chart, I show a decline of 6% over the past 10 years.

What surprises me is how you have responded.
It's a very common thing for people to invest with the expectation that they can retire using their stock portfolio to some/most extent.
It doesn't matter to me whether she put all her eggs in one basket or not - the fact is that it's a stagnant investment.
It would be foolish to expect an insane rate of return, but it would not be out of the ordinary to expect at least a positive rate of return.

its stagnant or declining slightly because they did not time well some important developments on the market. that stole momentum and shifted it to competitors. their catching up is a good start but doesnt make gone all the lost returns.
the perception of microsoft is not (yet?) at a point where stock rises. simple as that. as explained above, their healthy condition alone is not a driver of the stock price. its the perceived value. or more technical: the sum of all future cashflows discounted to today (little simplified).

it's a very good question - why hasn't msft stock performed instead of stagnating for the past few years?
you can dismiss it if you want - however, to do so would be ignorant / naive.

Packet1009 said,
it's a very good question - why hasn't msft stock performed instead of stagnating for the past few years?
you can dismiss it if you want - however, to do so would be ignorant / naive.

It has peaked, it has stabalized and I think now the stock actually judges Microsoft on their real value. Even succes stories such as Xbox and failures such as Zune have little impact on the grand scale of things.

Where as Apple has seen massive growth that has really effected their turnover. Apple is where Microsoft was 15 years ago. In the next decade the hype will disappear and they too will be judged on their real value.

So this is why Microsoft's hasn't performed. Besides when you get this big and have such a stable income its very hardto get everybody on board and really take a risk. Which is why what they're doing now is a bold move. In the next few months we might see the biggest fluctuation in msft stock in over a decades.

the stock market is a bitch, it does not reflect real value as it should. its not fair nor is it perfect. I work in that industry and even I have to admit its flaw.

then again, if you need your money, dont get into stock markets. looking at this shareholder i'd say she should not stay in it too long if she needs the liquidity. microsoft stocks wont see any wonders anytime soon.

typu said,
the stock market is a bitch, it does not reflect real value as it should. its not fair nor is it perfect. I work in that industry and even I have to admit its flaw.

then again, if you need your money, dont get into stock markets. looking at this shareholder i'd say she should not stay in it too long if she needs the liquidity. microsoft stocks wont see any wonders anytime soon.


I think there will be a good increase when they release the new Xbox next year

Tarazena said,

I think there will be a good increase when they release the new Xbox next year

look stocks include the perception of future actions already. if the stock would rise only because they release an xbox would point to an irrational market behaviour. this will most likely not happen. it is public news that they will bring an xbox and sales/profits can more or less be estimated. this is reflected in the current stock price already. only unforeseen/unexpected situations drive a stock price substantially (apart from market shocks as crisis etc).

Tarazena said,

I think there will be a good increase when they release the new Xbox next year
Like it did with the original XBox, or the XBox360, or Windows XP, or Windows 7, or just about any other product? Not to be mean, but do you really think Apple is "worth" $500+ and Microsoft $30 a share? It's based on all kinds of things, and the market says that Microsoft is worth (far) less than Apple or Google. If Google or Apple folded tomorrow, the world would be basically fine, but if Microsoft did there'd be a lot of issues and problems for enterprises and consumers the world over to deal with for a long time to come.

The stock market is it's own reality, and doesn't match the real world much. However, it's the market, and you learn to deal with it and continue to try to understand the fickle beast.

thats is how they move into the future, but is not all, and clearly MS have done many things in different ways to show profit is not their only gear, get you facts straight

carmatic said,
so here we have an example of why companies behave the way they do, profits above everything else

Exactly. And even after this obvious argument, there are still a lof of fanboys that just ignore that. What a bunch of dolls... They can't see that to criticize a company is because you care about them, or about your money, of course.

erikpienk said,
thats is how they move into the future, but is not all, and clearly MS have done many things in different ways to show profit is not their only gear, get you facts straight

Yeah, sure... It's more than about profits... It's about profits AND power.
Do you have any other idea of what else matters to a company?

carmatic said,
so here we have an example of why companies behave the way they do, profits above everything else

if Microsoft was 100% about profit they would not be spending 9 billion dollars on R&D and would be more like apple where they get others to innovate and repackage with their own marketing..

Lachlan said,

if Microsoft was 100% about profit they would not be spending 9 billion dollars on R&D and would be more like apple where they get others to innovate and repackage with their own marketing..

LOL. They do it because they're late, my friend. And they do it because they take the money from profit to give it to R&D... to actually make MORE money in the future. Or they just die with no innovation.

carmatic said,
so here we have an example of why companies behave the way they do, profits above everything else

Yes, why should a "for profit", or their shareholders, care that the company makes a profit? What lunacy!!!

carmatic said,
so here we have an example of why companies behave the way they do, profits above everything else

Ballmer's response also included innovation. Granted it includes innovation because Microsoft needs to deliver the next game changer to catch up with Apple in the growing markets.

The bottom line is, of course, all about profit. Shareholders own the company and 99% of them has a share because they expect to make a profit on it. But add a little competition and this proces of making money might actually deliver great products for consumers.

Consumers are just one other example of stakeholders that benefit from companies making profits. So I don't see what the problem is what companies wanting to make a profit. As long as there are regulations involved, it can be a win-win situation. And I'm from what half of America considers a socialist country

Luis Mazza said,

Exactly. And even after this obvious argument, there are still a lof of fanboys that just ignore that. What a bunch of dolls... They can't see that to criticize a company is because you care about them, or about your money, of course.

Written on my iPhone

carmatic said,
so here we have an example of why companies behave the way they do, profits above everything else

Wow! How very observant. And here I was thinking the whole point of starting a company was to make profits. Of course, if you have a better idea you could always put your hand in your own pocket , start you own company, hire thousands of people and give away your products at zero profit.

I won't hold my breath.

carmatic said,
so here we have an example of why companies behave the way they do, profits above everything else

Shock horror! It's a business, not some happy mystical place served only to think about you.

I run a business. Money is top priority.

Luis Mazza said,

LOL. They do it because they're late, my friend. And they do it because they take the money from profit to give it to R&D... to actually make MORE money in the future. Or they just die with no innovation.

"LOL"?

They've being "doing it" for years my friend..

Doh.