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Brier Dudley's Blog

Brier Dudley offers a critical look at technology and business issues affecting the Northwest.

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July 24, 2008 3:26 PM

Microsoft CFO to Wall Street: What gives? And forget about a Yahoo deal

Posted by Brier Dudley

If Microsoft CEO Steve Ballmer and CFO Chris Liddell weren't already bald, they would be from scratching their heads, trying to figure out why their stock is doing so poorly. Especially given the company's recent performance, including 12 percent average growth in Microsoft's core businesses since 2005.

Not to mention Microsoft's 18 percent growth over the last fiscal year.

"Those are fabulous numbers. Those are fabulous numbers for any company of any size,'' Liddell said to analysts.

And you may as well forget about Yahoo, he said, basically. Chances of a deal are now "neglible."

"A full acquisition, certainly in the time frame and sort of economics that we'd previous thought, essentially makes no sense."

Never say never, but a search deal seems unlikely as well.

Pay attention instead to numbers like these, Liddell seemed to be saying, in a speech highlighting slides like this one:

liddelll2.JPG


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July 24, 2008 2:29 PM

Microsoft's Mundie on the Next Big Thing after search

Posted by Brier Dudley

Speaking to analysts today, Microsoft Chief Research & Strategy Officer Craig Mundie shared a little secret: The next big thing in computing, after search.

In his words:

"An environment where space is the new frontier -- spatial environments where you interact with computers is going to be a big, big, deal," he said.

Mundie said this will "allow us to move the people who already use computers into a completely different metaphor of engaging with them."

It will also make it easier for the 5 billion people who haven't used computers yet to get engaged.

The Surface computing table is an early step in this direction. Another is the robotic receptionists coming to Microsoft's campus. They use facial and voice recognition to help employees request shuttles.

In other words, computers that operate all around you in 3-D, using projectors, microphones and sensors instead of mice and keyboards.

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July 24, 2008 1:51 PM

Microsoft's Muglia: Take that, Oracle

Posted by Brier Dudley

Microsoft server boss Bob Muglia didn't need any more exclamation points for his presentation at today's analyst meeting. His business has been growing 18 percent a year, nearly quadruple the pace of the enterprise software market.

But he was able to punctuate his speech by casually mentioning the acquisition of data warehousing company DATAllegro.

By acquiring the California company, Microsoft can move further into massive-scale enterprise computing systems, with products that companies can use to store hundreds of terabytes of data.

Muglia said the acquisition enables Microsoft "to compete for the highest end data warehousing solutions -- we've never been able to do that before."

He added that the DATAllegro system "will scale well beyond what Oracle can do today."

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July 24, 2008 10:28 AM

Microsoft analyst meeting: The donut report

Posted by Brier Dudley

The most remarkable thing about Microsoft's analyst meeting is always the way Wall Street types cluster around top executives in the hallways and at meals, straining to hear some valuable piece of extra information like groupies seeking autographs from a rock star.

Bill Gates always drew the biggest clusters, or donuts as the 'Softies refer to them. But he's not attending this year.

The year's donut king is Chief Executive Steve Ballmer, who drew a four-deep cluster of starched shirts in the hallway after his presentation in Microsoft's on-campus briefing center.

It continued at lunch. Ray Ozzie had the start of a donut at his table, but Ballmer was the main attraction witha a crowd peppering him with "off the record" questions, including comparisons with competitors such as Google and Apple. The answers were mostly colorful reiteratations of Microsoft earnings highlights.

It's inside baseball, but the best seats in the room, on each side of Ballmer during the meal of salmon and asparagus, were held by analysts Adam Holt of Morgan Stanley and Sarah Friar of Goldman Sachs.

Friar's predecessor, Rick Sherlund, always landed the spot next to Gates or Ballmer before he left for a hedge fund. He doesn't give up, though. At this year's lunch, Sherlund pulled up a chair so he was just behind Friar, still in the donut hole, an arm's length from Ballmer.

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July 24, 2008 10:00 AM

Microsoft-Yahoo deal: The Obama factor ending it?

Posted by Brier Dudley

Interesting tidbit from Microsoft CEO Steve Ballmer's presentation at today's analyst meeting; The Yahoo deal made sense if the regulatory reviews could be done before the federal administration changed.

Ballmer didn't say that the current administration is more sympathetic to Microsoft than the next one will be, although of course it was under the Bush adminstration that Microsoft's U.S. antitrust issues were largely resolved.

It may be a different story under Obama and even McCain, if Google and Yahoo successfully recycle the 1990s Silicon Valley storyline and cast themselves as the populist characters in a regulatory showdown with Microsoft.

Ballmer's probably being practical, not political. Changes in administration mean changes in regulatory bodies and approaches, which could prolong the review process and leave a Microsoft-Yahoo merger in limbo for too long. Especially if incoming regulators hope to make their mark scrutinizing such a high-profile deal.

(This implies that there will be a change in the regulatory administration; Would McCain dramatically change things at the FTC and DOJ, or is the assumption that Obama will win and shuffle the agencies?)

A change in European Union administration was also a concern that Ballmer mentioned:

"We wanted to get regulatory review in without adminstrative shifts in Europe and the U.S.,'' he said.

Ballmer said this in context of explaining what made Yahoo attractive. His tone -- and the looming election -- suggest that Yahoo's not attractive to him anymore.

"Yahoo for us was always a tactic, not a strategy," he said (a point in this column)

"At the right price and with the right speed of operation, it was a heckuva a good tactic," Ballmer said. "At the wrong price and if it had to stretch out over two adminsitrations, regulatory review, blah blah blah, it was not a good tactic."

Note the tense -- the deal was, not is.

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July 24, 2008 9:37 AM

Microsoft ad boss: Too many ad networks, consolidation coming

Posted by Brier Dudley

Speaking at Microsoft's analyst meeting, company ad czar Brian McAndrews said he's asked all the time about the proliferation of online ad networks.

His response: Get ready for consolidations, because the big winners will end up being just a few big players.

"There's going to be a tremendous amount of consolidation," he said.

No wonder so many venture-backed startups have turned themselves into ad networks in the past year or two.

I'll bet they're all waiting for the Yahoo drama to end, so Microsoft and Google can start shopping.

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July 24, 2008 9:23 AM

Ballmer: Online losses worthwhile, it's Microsoft vs Google

Posted by Brier Dudley

Tomorrow's online market opportunities are so great, it's worth losing a relatively small amount of money today investing in the business, Microsoft Chief Executive Steve Ballmer said at today's analyst meeting.

Ballmer said there's a $1 trillion market being transformed by the Internet and Microsoft is one of the best-positioned companies to capitalize on the digitization of content, communities and communication.

"As we go out five, 10 years from -- literally, within 10 years -- you'll have digital screens that are this light and this thin [waving a sheet of paper] and connected to the Internet. I will not bring paper. every surface we walk up to and touch will be a window to the world of digital information ... the question is what companies are really going to invest in the big opportunities around this?"

A few minutes later he answered the question:

"I think there's really only two companies on the planet that have the capability and the staying power -- Google and Microsoft."

Ballmer's not sure how long it will take for Microsoft's online business investments to pay off, but he let the Wall Street analysts know he's not going to take his foot off the accelerator.

The message: Don't fret about losses in the online business group.

"It's a relatively small percentage investment from an overall Microsoft standpoint in order to have a real opportunity at significant overall acceleration of our market value,'' he said.

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July 24, 2008 9:10 AM

Ballmer: We're the No. 1 enterprise software company, almost

Posted by Brier Dudley

At today's Microsoft Financial Analyst Meeting in Redmond, Ballmer said there are still huge opportunities for the company in enterprise software. Look out IBM:

"I think palpably we are this close -- Microsoft -- to be able to claim we are the No. 1 enterprise software company in the world,'' Ballmer said.

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Gadgets and games | Fun stuff I've written about lately includes Apple's iPhone, Hewlett-Packard's HDX laptop and Microsoft's Halo3. Also on the radar are new digital video boxes such as the Tivo HD and the Vudu.