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Microsoft's Ballmer Addresses Analysts

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Here are some thoughts on Microsoft's CEO Steve Ballmer and his comments to more than 250 Wall Street analysts this morning here in Redmon. </</p>

He opened the Financial Analysts Meeting by declaring, "We're in an environment where there's a lot change, a lot of growth." And Microsoft is in the right place at the right time to take advantage of that.

"We care about innovation," and Microsoft wants to make sure it creates "products that have impact" on people's lives and companies. Not innovation for innovation's sake, but real products that meet a market need. It sounds rudimentary, but Ballmer wants to make sure the Street knows this is a company focused on fundamentals.

He said, "I care a lot about our teams, our people, our organization," and that "We love to compete."

He addressed the share price which has gone largely nowhere in the nine years Ballmer's been CEO, even though Microsoft has enjoyed 18 percent annual compounded earnings growth in each of the last six years.

"For me personally, I care a lot about the financial success, the financial performance of the company," which is a good thing he says, since he's a major Microsoft shareholder.

"As a shareholder, I am deeply concerned about where we're going....I deeply care about the long term stock performance," Ballmer said.

"We care very, very much about driving financial performance... Driving shareholder value, he said. It all comes down to the Windows PC engine: "Windows is kind of the air that we breathe. We don't want to get a cold in Windows."

Surprisingly he launched into an attack on Apple Inc. "We're kind of being attacked by a single competitor that's much more closed, offering far less choice." It was a clear dig at Apple and the enormous success it's enjoying quarter to quarter that Microsoft can simply no longer ignore. Microsoft on the offensive against Apple, to this degree, is a real surprise.

He says he often hears from employees, "Don't we deserve a (price to earnings ratio) that's higher than everybody else's? We're a tech company!" He says not necessarily because of the unusual risks that Microsoft faces as a software leader.

His other priorities: Growth opportunities in the enterprise; technology shift risk; and success in online and mobile. He asked, "Where has market cap really been created? Mobile and online... Look at Google , Apple, Research in Motion ... Is there a big batch of economic value that we can create? The answer is yes."

When the presentation turned to Microsoft's online initiatives, things got a little uncomfortable with Kevin Johnson's sudden departure yesterday for the CEO job at Juniper Networks .

"In point of fact, we wish Kevin the best. He was a great contributor here. We thought it important to make sure that whoever was gonna tell you about the big investment we're making in 'online' was still gonna be here in three weeks, so that would be me."

"It's a huge transformation in the world's economy," says Ballmer about the internet. "The world goes digital. This is a transformation in its infancy. There's this huge, huge, huge opportunity on line on the internet."

There's at least a $1 trillion opportunity in media, communications and advertising. There aren't a lot of $1 trillion opportunities out there, he says.

Lots of room for innovation, he says. Merely because Google created the business doesn't mean it gets to own it forever. He's talking about big time, and ongoing investment, in this area, but was honest when he said he wasn't sure how long it would take to get this unit profitable. His message was clear: online IS where the biggest opportunities lay for Microsoft, and the company is digging in to do what it takes to get in this game.

Still, the questions remain as to how much and how long, and with that kind of uncertainty still looming over Microsoft, Ballmer's comments aren't likely to infuse shareholders with a newfound sense of excitement. Kind of like a baby-step in the right direction.

Questions? Comments? TechCheck@cnbc.com