Wednesday, July 23, 2008

Exit One Kevin Johnson

So this email comes in from Ballmer this afternoon and, after appreciating Mr. Ballmer's picture thanks to ShowSenderPhoto, I'm scanning through it, "Yep, yep, sounds like a bunch of the stuff covered this morning at the Town H-what-the-hell-Kevin Johnson is leaving?"

That was a surprise.

A... pleasant surprise.

I'm really surprised. There was Mr. Johnson up on stage this morning during the Town Hall causing me to roll my eyes with his fake enthusiasm and now he's leaving Dodge. On the horse he rode in on 16 years back. I know he did a lot to pick up the pieces after the Vista-debacle and is probably due a good amount of praise for letting Win7 align itself to be on the winning trajectory, but I just never bonded with Mr. Johnson's leadership. And some of the projects he's interested in and driving just leave me cold (e.g., the upcoming MSN UI revamp. It puts the F in WTF).

Is he taking the opportunity to be CEO of Juniper? Is he the fall guy for Yahoo! being such a bumbling mess? Is his departure meant to make way for a big acquisition / merger?

As we consider the long race to succeed Ballmer, I was certainly worried that Mr. Johnson was at the top of the stack rank. No reason to worry anymore! And three of my favorite technical leaders, Mr. Sinofsky, Mr. DeVaan, and Mr. Veghte, all move up a notch. Hey, one less layer in the company. Throw all three of them in the running, eh?

If this had only happened before Ms. Foley's chat in Redmond about Microsoft's future: Audio Mary Jo Foley on 'Microsoft 2.0'.

Anyway, it's one hell of a way to kick off our Financial Analysts Meeting (psst, here's a hint: surprises? Analysts no like). Any interesting takes on the departure, and the future hire that's TBD? First comment I've seen:

Wow, I just heard that Kevin Johnson resigned. So much for trying to rid the product group of the cancer left by Allchin! This is not a good day for future quarterly results....

(Updated: fixed rather embarrassingly wrong honorific - sorry!)

Thursday, July 17, 2008

Microsoft FY08Q4 Results

FY08Q4: sorry, Microsoft, folks are saying your lipstick just doesn't help that pig much: Microsoft’s Annual Revenue Reaches $60 Billion Fastest annual revenue growth since 1999 fuels 32% increase in earnings per share.

Pre-announcement portion: my favorite post-analysis sites for the end-of-FY08-results:

Leaving the list is the departed MSFTExtremeMakeover, though the final post is a good read.

Most analysts are expecting a solid quarter:

  • Microsoft Tests Its Might - "Analysts expect 17% year-over-year revenue growth to $15.65 billion and earnings growth of 20.5% for earnings per share of 47 cents, according to Thomson Reuters."
  • Microsoft expected to post gains amid Yahoo turmoil - MarketWatch: "Sanford Bernstein analyst Charles Di Bona wrote in a note to clients Tuesday that he expects Microsoft to post a 39% gain in online services revenue to $960 million for the recently-ended quarter, though he noted a spate of recent reports showing a decline in its online search presence."

I'd expect solid numbers, too, especially with Office and SQL Server, and some shine being put on Vista numbers, especially with the departure of XP. It will be interesting to see the write-ups today, given that Google is announcing their quarterly results today, too, so some compare and contrast might arise.

With the Yahoo! foolishness going on the Online business will get extra scrutiny on the call, along with any sort of probing around the edges concerning Yahoo! plans and how it affects Live Search scale-out. Next week is the Microsoft Financial Analysts Meeting on campus, followed by a Friday morning "Word from Wall Street" meeting that I highly recommend (prediction: for at least the 3rd year running, Mr. Charles Di Bona will insist that Microsoft increases its dividend to something of significance to make up for the total lack of stock performance).

If you're in a good mood, avoid looking at the one-year chart for the MSFT stock. Yes, we did hit up in the $37 range. Yes, just a short time ago, we dead cat bounced onto $25. Mr. Ballmer insists he doesn't pay attention to the Microsoft stock price, but all this hammering on Yahoo!, and the dissatisfaction around Yahoo! stock price we're leveraging, has to come back to stick on Ballmer one of these days.

Jack Welch got the nickname Neutron Jack. Mr. Ballmer's gonna be due a financial nickname soon, whether due to his Ahab pursuit over Yahoo! or finally investors giving up on his inability to channel solid profits into a worthy stock price but rather kneecapping the stock quite often. Flatline Steve? Ballmer the Embalmer? I think I need some Wall Street wit to help out here.

Later, after the announcement...

Once again, our stock is kneecapped, this time it would appear thanks to the ongoing Yahoo! foolishness.

I wasn't too happy with the Shinola that has crept into the reading of our numbers. I like enthusiasm, but even I was a bit put-off. I also didn't like how useless most of Mr. Liddell's answers were on the conference call. Of course, folks were trying to ask oh-so-hard questions like "When will Online Services turn a profit?" Not 2009. 2010? If you were to pull the plug on MSN and Spaces tomorrow, who would notice? Or, should I say, who would not be able to find a similar (perhaps even profit-making) service to immediately start using? Inconvenient? Yes. Essential? No.

Monday, July 14, 2008

The Tumbling Tumbleweeds of Summer

(Rocking back and forth in the rocking chair after a nice fine sunny NW day - pity they have WiFi in so many places nowadays...)

Oh, hi.

Looks like it's going to be tumbling tumbleweeds here for a while, at least until the weather turns rainy again (bizarre pre-4th thunderstorms excluded).

Perhaps as a sign of resignation here, I'm far more interested in enjoying some concerts and great hiking than sharing any perspectives about my take on Microsoft. I look back four years ago from when I started sharing my conversation, and it's sort of a wash. Yes, we've had some flattening that Jack Welch even might grunt a tacit approval to. Internet Explorer reformed. There was a revamping of the 4.0/3.5/3.0 scale. Towels. But JHC, we continue to balloon and expand with no rhyme and reason, and cutting back in employee size is the tune I came here to sing. So, enjoying a breeze off of Puget Sound is a lot more pleasurable than thinking about our constricting bloat.

First thing: for those in Redmond / Seattle who read this post right while it's fresh, Ms. Mary Jo Foley, author of the book Microsoft 2.0, will be in Redmond to discuss all things Redmond on July 22nd: Bringing Microsoft 2.0 to Microsoft. 6pm. Malt & Vine. 16851 Redmond Way.

BillG put in his goodbye since my last post. Pick up Ms. Foley's book and read the Mini-Microsoft foreword for some of my feelings around that. Look, BillG is not replaceable. No one is going to take his place at Microsoft. I mostly enjoyed his goodbye presentation, though I had to shake my head when Ballmer reflected that Bill's greatest parting gift to us was the culture of Microsoft. No, that's messy. You can impart a culture and expect it to continue in your daily absence. Bill's culture fades day to day, unless the emerging leadership truly pushes forward with it as their own. But can they even live up to him? No. Time for a new culture, one that makes sense for our current challenges and that shows the level of quality of our leadership.

As a small example of culture: I'm back to reading some business books. It's pretty sad that I have to read Jack Welch to get an understanding of the basis of our differentiated rewards review system, vitality curve and all. I may not agree with it, but at least Mr. Welch takes time to explain its application, end-to-end, to the huge organization that GE is. Which is more than Microsoft leadership does. We just sort of assimilated it, bolted it on, and said "it is what it is."

As BillG heads out, Ballmer's in the middle of leading this classic Pacific Northwest passive aggressive can't make a clear decision to save our lives play for Yahoo! Well, as of today, less passive, more agressive. I feel like we are Yahoo!'s creepy and inappropriate neighbor, peeking through the slates in the fence, asking for a date whenever given a chance. And, oooo!, the Yahoo!s have a new boarder moving in, Carl! Carl's not exactly our friend, but he will invite us over to hang. We're gonna get a date with that cute Yahoo! chick yet! She has an awesome car we've been dying to drive around town.

For Yahoo! we stumbled over our own feet and had to put away the hostile takeover knife we pulled, and in the immediate aftermath was folks wondering: "Gee, this Ballmer guys needs to be replaced. But with who? There's no obvious replacement. Dude. Looks like Microsoft better just keep him."

That's scary in two ways: one, the lack of confidence and respect the community has for Mr. Ballmer's leadership and results (though, a large part of this is riding on Kevin Johnson's shoulders). Then, two: not to wish bad things, but if Mr. Ballmer was run over by a truck (American made, thank you): then what? Who'd take his place?

In short order, Mr. Ballmer has to start a race, running from President down to Corporate VP, to identify his successor. My money was always riding on Jeff Raikes, but BillG has Mr. Raikes now. I'm concerned about who Mr. Ballmer and the board would choose. Some golf-club flim-flam smooth-talker, someone who thinks another Microsoft-branded web browser would be a swell idea? Someone who has never written a piece of software in their lives, let alone shipped and supported it?

No, not to run Microsoft.

I guess I'll spend some time lingering over the VP biographies (trying not to sigh and swoon [remember: inappropriate]). Who would you follow? Who do you respect? I don't care if you hate their guts, who would you want to step up and lead Microsoft in the years ahead?

As part of the challenge of discovering a worthy, I hope this year's Company Meeting returns and builds out the theme of Many Microsofts. I'm a fool for thinking of one leader to run it all, perhaps. But we need some obvious folks to step up. Cos we're not there.