Ballmer: Microsoft’s cloud revenue numbers are “bullshit”

3 Dec 2015 | Author: | No comments yet »

Ballmer Derides Microsoft Over Cloud Revenue Announcements.

One of the chief investors of Microsoft Corp. investor, Steve Ballmer, wasn’t elated with the level of disclosure at the company’s yearly shareholder meeting that took place in Bellevue, Washington on Wednesday. “It’s sort of a key metric — if they talk about it as key to the company, they should report it,” Ballmer, who is the company’s biggest individual shareholder, stated to the Bloomberg at the company’s annual meeting.

The annual shareholders meeting hears a discussion of diversity, meets the two women who are new board members and sees results of a symbolic vote on executive pay.Last month The Verge reported that Project Astoria, Microsoft’s plan to bring Android apps to its Windows 10 Mobile platform, has been put on hold, but it seems one notable figure from the company’s recent history would disagree with that decision. Microsoft issued reports of its annual revenue run rate — or sales at a particular point in time completed to a yearly rate — for its commercial cloud business and have stated that it is targeting to breach $20 billion mark on that basis by 2018. Ballmer, who was succeeded by Satya Nadella in 2014, mocked the use of term run rate as “bulls—.” The disgruntled Ballmer said that, “They should report the revenue, not the run rate.” Margin — a measure of profitability — is significant since the gross margins for software are so high, but far lower as oppose to cloud and hardware services.

Jesse Jackson again opened the question-and-answer portion of the event, asking the company to keep up its pressure to make its workforce look more like the customer base. “Microsoft can lead,” he said, praising its programs that promote diversity among its suppliers and in its financial operations. The audience member was asking Nadella about what Microsoft plans to do about its lack of support for important mobile apps like Starbucks, according to Bloomberg. Microsoft Chief Executive Satya Nadella thanked Jackson for his comments and listed some areas where the company had made progress since visiting with the civil-rights leader a year ago, including increasing the proportion of blacks and Hispanics in its executive ranks and courting a more diverse pool of university candidates. Ballmer quipped that he has deliberated the issue with the firm and that after close two years of being not a CEO, he is clueless what these figures are.

The company’s mission “has to start with diversity and inclusion right here at Microsoft and us representing the world internally,” Nadella said. “I feel we’re very focused on it.” Jackson and his Rainbow Push Coalition have been pressuring technology companies, which tend to be male-dominated and have small contingents of African Americans and Hispanics, to reshape their workforces to more closely mirror the broader society. This all may seem a little rich coming from the man who presided over Microsoft’s mobile foundering with an extreme reluctance to embrace other platforms — it’s certainly easier for him to take this position now. Chris Suh, the general manager of Microsoft for investor relations stated “We enjoy a regular dialogue with Steve, and welcome his input and feedback, as we do from our other investors.” Ballmer also lashed out Nadella’s answer to an audience member inquiring the lack of key apps, such as the one for Starbucks, on the firm’s Windows Phone.

During the brief business end of Microsoft’s annual meeting, shareholders approved the board’s 11 director nominees, with each receiving more than 93 percent of the votes cast. But with more and more high-profile apps actually leaving the Windows Store altogether, it’s clear that Microsoft needs a credible app strategy if its latest mobile initiative is to gain any ground at all. Nadella retorted by noting the firm’s intent to appeal to Windows developers by enabling them to come up with universal applications that run on computers, phones, tablets and computers, aiming at an assortment of devices than just Microsoft’s mobile devices that have only a single-digit share of the mobile niche. On the day’s other major shareholder vote, a symbolic ratification of the company’s executive-compensation packages, Microsoft again received some disapproval from its investors.

Three-quarters of companies obtain approval rates of 90 percent or more, according to data compiled by executive-compensation consultant Semler Brossy. Analysts say Microsoft’s relatively low approval rate stems, in part, from concerns over a massive long-term stock grant awarded to Nadella after the chief executive was promoted in February 2014. Other executives that year received generous stock grants as compensation for remaining at the company through the CEO transition that led to Nadella’s selection. And in a nod to shareholder concerns, the board in its materials emphasized a shift in its pay practices to awarding executives based on their own and the company’s performance. At Wednesday’s meeting, questions from the audience focused on other issues of diversity, including a woman who asked about the company’s consideration of visually impaired people for board seats.

One shareholder, Ken Copley, of West Des Moines, Iowa, made the trip to ask executives if Microsoft, having largely lost the smartphone market to Google and Apple, intended to mount a stiffer challenge for devices linking the home.

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