The future's so bright, I gotta wear shades!

I'm paraphrasing, but that's essentially the message from Ballmer at today's annual shareholder meeting. Of course, that's been his message at every other shareholder meeting since he took over as CEO 6 years ago - a period, it should be pointed out, during which MSFT's market cap has been cut in half.

His obligatory "we're extremely excited and optimistic" about the future, was augmented with lots of talk about "multiple cores". Seemingly, this is his latest favorite company analogy, replacing the previous "fast and slow twitch" muscles. [Aside: Is it just me, or does it seem odd that the "people-ready" company would move from something at least suggestive of humans (muscles) to the antithesis - a silicon chip?] According to Ballmer, MSFT now has four cores: Desktop, Server, Entertainment and Devices, and Online. Of these, the Online one was referenced as the most critical to get right. Duh! He reiterated that MSFT would be "a leader" in this area, which sounded pretty hollow following 2-3 years of anemic search/advertising performance. However, numerous stats surrounding current offerings (live mail, search, space, messenger, and 20 other services) were offered up as evidence of progress. Left out, of course, was that niggling detail that collectively, all are currently unprofitable. But hey, why screw up an otherwise compelling story by dealing with reality? He went on to note that the company returned $23B in cash to shareholders via buybacks and dividends during the fiscal, but continued the trend of not commenting on the stock itself. Gee, I wonder why? There was also lots of talk about the need for more "big bold bets", without bothering to explain why shareholders should continue to underwrite these given the failure of existing ones to generate profits. Finally, according to Ballmer, the major reason for optimism is that MSFT has managed to assemble the "strongest leadership team in the company's history". While that may explain the recent decision to treat these folks to $1B in bonuses, it's less clear what metrics he would point to as evidence to support that assertion (certainly not returns on current big bold bets, for example). More importantly, the key question is whether they're strong enough for the task at hand (i.e. how do they stack up to competitors?) - not simply whether they're the strongest MSFT has fielded to date. Bottom line, it's clear they're being paid as if they're world-class. It's just not obvious from actual results that they're delivering value for money.

Gates also spoke, but was so boring that I barely made any notes at all. If you have trouble sleeping at night, I highly recommend listening to this segment. There was more talk about how "fantastic" this past year was. Translation: low double digit-growth is now apparently considered exceptional performance. He went on to discuss highlights on Xbox 360 (expect 13M units sold by June, 2007), Xbox Live as an example of the potential of Live services, "foundations for success" like Windows Mobile 5.0, and even managed to squeeze in a comment or two about Office and Vista RTM'g, before getting back to more money-losers break-even businesses - like Zune, etc. All in all, a big ZZZZZZZZZZZZ here.

At this point, 55 minutes into the webcast, the official content concluded w/o the stock and its sorry multi-year track record having been mentioned once! It boggles the mind that a public company who's stock has underperformed the S&P for 5 consecutive years, would host a shareholder meeting and not even mention the stock. Is there any doubt that if MSFT ever managed to actually beat the S&P again, suddenly that performance would be the kick-off to the shareholder meeting and management would take a collective bow for securing it?

Lastly, we had the Q&A - normally the only useful part of these events. Unfortunately, there was little there either. One shareholder did ask about the dividend, but Ballmer quickly fobbed that off with "the Board regularly reviews it". I guess that means they regularly look at it and say "Yup, that's below market alright". Incredulously, not one shareholder in attendance bothered to call the management team on the obvious. Namely:

All optimism, excitement, leadership prowess, etc., aside, you've managed to underperform the S&P for 5 consecutive years. What are you doing to address it?

Meanwhile, at present, the S&P is up 9 points, the NAS up 22, GOOG up $8.17, AAPL up $0.50 and MSFT down $0.02.

Update: Corrected some mistakes and here's Todd Bishop's take on the shareholder meeting (we did listen to the same meeting, right?):

• Microsoft answers shareholders