Microsoft warns of a long workout after economic ‘reset’


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A chief executive has to work pretty hard to push his shares lower on a day when the market overall is surging.

Microsoft Corp. CEO Steve Ballmer managed that feat Tuesday: The software titan’s stock was the only one of the 30 issues in the Dow Jones industrial average to decline.


Microsoft slipped 4 cents to close at $17.17. It traded at midday at a new 11-year low of $16.36.

Ballmer sounded gloomy about the economic outlook at an investor presentation in New York.

‘You don’t beat it,’ he said of the economic slump. ‘You manage in this environment. You don’t think about it as shorter-term, you think about it as a ‘reset’ that may take several years.’

Ballmer again declined to provide guidance about the company’s earnings prospects in 2009. The firm in January shocked analysts when it reported an 11% drop in fiscal second-quarter earnings and said it would cut as many as 5,000 jobs to rein-in expenses.

From’s summary of Tuesday’s presentation:

In his discussion to members of the financial community, Ballmer reiterated that he does not expect the economy to improve very quickly, so Microsoft is prepared to hunker down and spend carefully until it does. Ballmer said to figure out how, he’s taking cues from how companies handled previous economic crises, most notably the Great Depression of the late-1920s and 1930s. . . .

‘I’ve had guys go through annual reports of a bunch of companies from 1927 to 1938 to see what were those guys saying,’ he said. Microsoft is following the example of one company in particular, RCA, which kept investing in research and development during the Depression and afterward dominated its industry, Ballmer said. Microsoft, too, will try to make gains in some areas where it can improve its market-share position while the economy is down. ‘We’ll compete for share -- that’s one thing that’s economy independent,’ he said, adding that he is repeating a mantra of ‘share’ to his staff to remind them of its importance.

The stock also may have been under pressure today from rival Google Inc.’s announcement that it was joining European regulators in an attack on Microsoft’s dominance of the Web browser market, ‘injecting more bad blood between two of computing’s richest and most powerful companies,’ as the Associated Press noted.

Ballmer also addressed Microsoft’s competitive battle with Google and Apple Inc.

-- Tom Petruno