Photo: sjsharktank / Flickr

Nothing must be as frustrating and equally satisfying as being the ‘top dog’ who’s always proving your haters wrong. Microsoft, and CEO Steve Ballmer, are in this very position, going into the third earnings call in a row where they have proven their doubters wrong.

Posting big numbers

Microsoft posted record second-quarter revenue figures, as well as record profit numbers. Microsoft revenue for the quarter totaled just shy of $20 billion, coming in at $19,95 billion. Of this operating income and net income were both sky high at $8.17 billion and $6.13 billion respectively, resulting in earnings per share of $0.77. This is a very respectable climb, with revenue being 15 per cent greater than it was in the same period last year, and earnings per share spiking 28 per cent.

Kinect, you beauty!

While 2010 was a frantic year for Microsoft, seeing Windows 7 uptake spiking, and the release of the latest version of Office for PC, the big, big, big story of 2011 was the company’s unbelievable Kinect sales. The Xbox 360 peripheral sold 8 million units in just 60 days, to become the fastest selling consumer electronics device in history!

Not even Microsoft was ready for this, with CFO Peter Klein saying: ‘We are enthusiastic about the consumer response to our holiday lineup of products, including the launch of Kinect. The 8 million units of Kinect sensors sold in just 60 days far exceeded our expectations.’ In fact, Kinect did so well for MS that revenue for the Entertainment and Devices division was up a remarkable 55 per cent, while the Windows division fell 30 per cent.

Hurry on, 2011

In the current calendar year, it’s all eyes on what Microsoft revenue can be derived for Windows Phone 7 sales. With Windows OS and Office providing consistent sales numbers, and the Xbox division finally proving good as a revenue spinner, it’s all eyes on what the company’s mobile OS platform can do.

Photo: Martin Olsson / Wikimedia Commons

Microsoft CEO and everybody’s ‘bad guy’ when the venerable company is questioned about why it isn’t a force online has just sold a big stake of his shares in the company.

Thanks, I’ll take billions

Reuters reports that at the end of last week, Ballmer sold 49.3 million of his shares in Microsoft. At the time, the share price of the company hovered at $27 (£16.74), earning Ballmer about $1.3 billion (£806 million). That’s not a bad chunk of change to have by any measure. And it appears Steve Ballmer is not quite done yet, with reports pegging his overall sales at 75 million shares by year’s end, getting him a little over $2 billion (£1.24 billion).

What is worth noting, though, is even after this sale, Ballmer is still Microsoft’s second biggest shareholder, behind only Bill Gates.

Not leaving

According to a statement released by Microsoft and Steve Ballmer, Ballmer looks to assuage any fears of this signaling he is leaving, by calling the sale a ‘personal financial matter’, as well as saying: ‘I am excited about our new products and the potential for our technology to change people’s lives, and I remain fully committed to Microsoft and its success.’

Nevertheless, a question mark still hovers over the future of Steve Ballmer at Microsoft. As Apple and Google have gone from strength to strength, for Microsoft it’s been prudent business as usual. Which, in every industry but technology, would be highly respected by investors and analysts alike.

Why cash out now, though?

Outside of personal financial reasons, and even if Ballmer has no intentions of leaving, and we take his statement at face value, it must be noted that he is selling his shares at a pivotal time for Microsoft. In the last month alone, Microsoft has released three major products – Office for Mac 2011, Microsoft Kinect, and Windows Phone 7 – with two of the three being brand new products the company is betting a large part of its future on. If Ballmer and company are so confident in these releases, why would he take skin out the game now?

Photo: Microsoft

Steve Ballmer, Microsoft’s CEO, has said the company will move more and more of its business to cloud computing as time passes, so much so that their new tagline for the service is ‘we’re all in’.

90% of mental focus, physical effort

Speaking at the University of Washington for the first time ever and amidst much anticipation by the college’s students, Ballmer said that a full 70% of Microsoft’s current workforce is focused cloud computing related work. By the end of next year, he expects 90% of the company’s workforce to be involved in cloud related work.

To put that figure into perspective, with respect to how much engineering talent and man power Microsoft is throwing at the problem, the company employs
93, 000 people around the world. Ballmer’s most acute quote to describe how big of a deal this is was, ‘we’re all in’ and ‘this is the bet for our company’.

A different side to Ballmer

Given Microsoft has been uncharacteristically consistent across the board with how good their work has been of late, it should come as little surprise to hear Ballmer say uncharacteristic things. Never one to disappoint, Steve Ballmer praises Apple and Google both, unarguably the two biggest competitors the company has.

Photo: Apple

Speaking of Apple, he said that they’ve done a ‘nice job’ with their iPhone companion in the form of the app store, suggestive that he would like to replicate what’s good about it with Microsoft cloud computing initiatives as well as Windows Phone Series 7. And in answering a question on whether this newfound business focus is more reactive than proactive, he readily admits the company is following Google’s lead in a market that Google themselves didn’t exactly create, but certainly trailblazed.

Interesting strategy

Photo: gynti_46

Given anecdotal evidence, this may seem premature. Microsoft has just sold 90 million copies of Windows 7 in under six months, making it the fastest selling operating system of all time, suggesting their business that isn’t cloud computing-related is still doing well. Then again, though, it’s probably best that the company kills its own cash cow than someone else doing it, as the competitive space in technology evolves rapidly and, it seems, Steve Ballmer is not ignorant of this.