Microsoft held its annual shareholder meeting yesterday and unsurprisingly the company's members weren't too happy. Despite a number of successful, high-profile product launches over the course of the past year and profits growing above analyst expectations, share prices have been stuck in the doldrums for some time.
This is why one disgruntled shareholder raised the inevitable question of whether "we have the model wrong... Is it time to consider breaking this company up?"
The comments echo those made in the past, most recently from analysts at Goldman Sachs who last month called on the company to separate the enterprise and consumer businesses in an attempt to "unlock hidden value".
In response, Steve Ballmer said that "I obviously don't think it is time. I don't think it would be useful. I think it creates economic dis-synergies, in fact". He explained that the nature of the company meant that several of the business units relied on support and technologies from other areas. In addition, there were other divisions, including Office, that couldn't be neatly pigeonholed as consumer or enterprise focused. In all, he felt that sub-dividing Microsoft would mean "creating a harder time competing for all relevant parties".
The CEO admitted that it may not be the best, most financially efficient approach, but it was the best fit for Microsoft. "Yes, it's expensive, but I would never think about not doing that. I think it's fundamental to who we are, where we're going, and the rest of our businesses".
Bill Gates, who was there in his role as chairman, agreed with Ballmer, adding that "the Microsoft brand, the scale of Microsoft Research on a worldwide basis, the intellectual property we build up, the way we hire and train people, there's a lot of synergy across the company, and it's been a real strength."
He concluded by saying that "I don't think there's a line where you'll find net simplicity by trying to create a new company".
However, Ballmer did note that, as is the case whenever these suggestions come up, he would give the idea a "proper, disciplined look".
The full transcript of the meeting is available from Microsoft's investor relations site.
