Software Notebook: Microsoft money man Liddell on finances, Facebook

Chris Liddell, Microsoft's chief financial officer, talked about issues including the company's financial results, acquisitions and its controversial Facebook investment during a recent interview. Edited excerpts:

On the reaction to Microsoft's unexpectedly strong first quarter results: "People externally, I think, are seeing the benefits of some of the things we've been doing over the last few years. Perhaps that's been more clear internally than it has been externally. But certainly there's been a change in perception from investors about, in particular, the benefits of the investments we've been making."

On the financial losses in Microsoft's Online Services Business: "It is a multiyear program, and I think we have been very open with the outside world about that. We have talked to people about the investments we're making and some of the acquisitions we're doing, the money that we're spending internally.

	Liddell

"The fact that the division is going to lose money is not a surprise to people. The advertising component of it grew at 25 percent last quarter, so it's not bad in the short term. I think in the short term we're actually doing very well there.

"In terms of really building it into critical mass, that's a multiyear program."

On Microsoft's minority investment in Facebook, and the overall $15 billion value it placed on the social networking company: "Obviously, I feel comfortable with the transaction we've done. ... I think there's a great example of finance taking a role in that and thinking about the holistic aspect of what we're trying to do in the online services, how Facebook fits into it, and how (the deal) is a very powerful way of creating a partnership.

"So I'm really comfortable with the overall transaction. The $15 billion number is a big number. But can I see realistic scenarios where the company could be worth more than that? Yes, I could. It's a big call, but it's a very good one strategically."

On the decision to temper the company's employment growth: "We went through a very strong period of growth. I think it was appropriate to slow down the number of people that we're employing, just simply because, from an organizational design point of view, from a facilities point of view, from every point of view, you have to have a burst, and then you have to actually have a consolidation period.

"We're still growing, clearly, but we're not growing as fast as that. From my point of view, getting the employee growth to what I consider to be a more sustainable level is the right thing to do. I've been pushing that personally at a senior level."

On his conversations with employees about Microsoft's share price: "I never make a judgment about whether it's too high or too low. Clearly that's not my role.

"What I talk about is the things that will drive it up or down, and the way in which investors are perceiving it, and the strategic things that they're thinking about -- how successful we're going to be online, what the growth rate's going to be in our core businesses, what happens to our margin structure. I talk about the factors that are driving it.

"I try and translate that into real things that people are working on."