Microsoft shareholders question exec stock sales

The recent jump in Microsoft Corp.'s stock price was on the minds of shareholders during the company's annual meeting Tuesday -- but not necessarily with a sense of satisfaction.

During a question-and-answer period, executives were asked to address the recent stock sales by Microsoft Chairman Bill Gates, board member Jon Shirley and some executives that followed a sharp increase in the stock a few weeks ago.

"The talk out of Wall Street is that this showed a certain lack of confidence in the future of where the company is going," shareholder Peter Schroeder of Seattle said, addressing executives during the meeting at the Washington State Convention and Trade Center. He noted that the stock has been slipping in recent days.

Microsoft Chief Executive Steve Ballmer, who hasn't recently sold shares, said the sales by others don't signal a lack of confidence.

"Our board members, our top management, Bill and I are all ... significant shareholders in the company," he said. "It's a significant part of what we own and our net worth, and there's a lot of confidence and faith, I think, in the future of the company. But from time to time people will sell shares."

Regulatory filings show that Gates has sold about 13 million shares, worth more than $476 million, since Oct. 31. However, his number of shares sold is on track to be about the same as in quarters past. Gates is still the company's largest shareholder, with holdings worth nearly $30 billion, based on current market prices.

"I have the majority of my net worth in Microsoft stock," Gates told shareholders. "I've sold the same number of shares every quarter for over five years, so that's a plan that I've been on and so that's a very predictable thing."

At the same time, Gates added, "I certainly agree with you, we all want the stock to be as high as possible."

Microsoft shares closed the day at $34.46, up 3.5 percent, but still well below the recent peak of more than $37 a share.

Other notes from the meeting:

Ballmer expressed confidence in the company's growth prospects and cited industry trends that he believes will be key in the coming years: The rise of emerging markets, the shift toward software delivered as an online service and the related shift toward advertising-funded software.

To illustrate the importance of emerging markets, Ballmer gave some financial details on a level that Microsoft doesn't typically provide. Three years ago, he said, the company's combined revenue from Brazil, Russia, India and China was $900 million. By the end of the current fiscal year, he said, the company expects revenue from those countries to reach almost $3 billion.

It was Gates' last shareholders meeting as a full-time Microsoft executive, although he has said he will remain Microsoft chairman after going part-time in his executive role later this year. He mentioned that fact briefly to the shareholders, expressing confidence in the company's leadership team.

Ballmer noted that the company, during the past fiscal year, returned $31 billion to shareholders in dividends and stock repurchases. "That's more than 170 percent of operating cash flow," he pointed out with a chuckle. "Not sustainable every year, but a great year for us." One shareholder still asked the company's executives later, "I'd like to know if Microsoft is going to be more aggressive in purchasing their stock back."

The Q&A portion included comments by the Rev. Ken Hutcherson of Antioch Bible Church, who previously threatened a boycott of Microsoft in response to the company's support of workplace-related gay-rights legislation. He cited past discussions with Microsoft executives and alluded to the possibility of further action against the company, saying he is "probably one of the worst nightmares that this corporation can have."

Later, shareholder Lonnie Lusardo asked what shareholders could do to support the company in opposition to Hutcherson. Brad Smith, Microsoft's general counsel, cited shareholders' previous support of the company diversity policy.

During the business portion of the meeting, all 10 members of the Microsoft board were re-elected, and two shareholder resolutions failed. One asked company management to institute policies for dealing with Internet censorship in foreign countries. Another sought to establish a board committee on human rights.

Shareholders perusing the Microsoft product demonstrations after the meeting included Les and Lois Knudson of Shoreline, who said they have owned Microsoft stock since the late 1980s. Les Knudson expressed some regret about not selling a portion of the Microsoft shares to buy Google stock after it went public.

But Lois Knudson said they also felt some validation for holding on to their Microsoft shares after the recent price increase, even though it has declined somewhat since.

"Life has its ups and downs," she said. "And so does a stock."