Internet Changes Everything

Excerpts of Ballmer memo sent to Microsoft employees

The Seattle Times: Business & Technology: Excerpts of memo sent to employees

On employees:
"For the company to improve, we need our employees to realize their full potential. We will work this year to bring more focus and rigor to developing our people: as individual contributors, as teammates, as thought leaders and as people leaders. We want all our employees to flourish, but we especially want to ensure that we give all the responsibility and reward we can to employees who can handle more, whether they are right out of college or experienced employees."

On cost-cutting:

"We have as much opportunity to grow as any other company in the world. That's a big statement, but the opportunities we've scoped out are very big. Make no mistake — we must grow our revenues to grow profits. We cannot just cut costs. At the same time, we must ensure a competitive cost structure, or competitors will offer prices, services or innovations that we cannot afford to match. Other companies have been severe in tightening costs the last few years — layoffs, major benefit reductions, etc. We have not done those things and want to be prudent now so we avoid severe measures later."

On the company's cash holdings:

"Some employees have asked why we can't use some of our $56 billion in cash to avoid making the benefits changes. Using the cash reduces profits, which reduces the stock price. The cash is shareholders' money, so we need to either invest in new opportunities or return it to them."

On its stock price:

"Obviously, we all want to increase the value of our stock, and we have the best opportunity to do that since the end of (fiscal 1998). Our stock was around $25 then, as it is now, and we have more than doubled our operating profits since. Shareholders then were betting we would work hard for all these years to make the company worth that mid-'98 stock price. We have done so. I see a number of other public companies or soon-to-be-public companies that will deal, as we have, with flat stock price for a number of years while they build adequate profits for their stock prices. The key now to growing our stock price is growing profits even more. If we grow our profits, our stock price is poised to respond."

On costs:

"Even with the changes we made, our cost per employee will still rise in (fiscal 2005) by 6 percent, and most of that is a significant rise in per employee benefit cost. For example, per-employee healthcare costs — the largest single component of U.S. benefits — skyrocketed 54 percent from (fiscal 2001) to (fiscal 2005), and for (fiscal 2005), the cost of medical benefits will rise by more than $880 per employee."

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July 8, 2004 at 11:00 PM in Microsoft | Permalink | TrackBack (1) | Top of page | Blog Home